<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 17, 1999
-----------------
SAFESKIN CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant specified in Charter)
FLORIDA 0-22726 59-2617525
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
12671 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (619) 794-8111
--------------
- --------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
On November 17, 1999, Safeskin Corporation ("Safeskin"),
Kimberly-Clark Corporation ("Kimberly-Clark") and Brooks Acquisition Corp., a
wholly-owned subsidiary of Kimberly-Clark ("Merger-Sub"), entered into an
Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement
provides for the merger of Merger-Sub with and into Safeskin (the "Merger").
Pursuant to the Merger Agreement, each issued and outstanding share of common
stock, par value $.01 per share, of Safeskin (the "Safeskin Common Stock"),
other than shares owned directly or indirectly by Kimberly-Clark or Safeskin,
will be converted into and exchangeable for 0.1956 of a share of common stock,
$1.25 par value per share, of Kimberly-Clark. Reference is made to the Merger
Agreement and the Joint Press Release, dated November 17, 1999, issued by
Safeskin and Kimberly-Clark, attached as Exhibit 2.1 and Exhibit 99.1,
respectively, which are incorporated by reference herein.
Concurrently with the execution of the Merger Agreement, each of Richard
Jaffe, Irving Jaffe and Neil Braverman entered into a Stockholder Agreement (the
"Stockholder Agreements") with Kimberly-Clark pursuant to which each of such
stockholders agreed, among other things, to vote the shares of Safeskin Common
Stock over which they have a right to vote in favor of the Merger and against
any proposal that would compete with, or impede, frustrate, prevent or nullify
the Merger. Reference is made to the Stockholder Agreements, attached as Exhibit
99.2, Exhibit 99.3 and Exhibit 99.4, respectively, which are incorporated by
reference herein.
Also concurrently with the execution and delivery of the Merger
Agreement, Safeskin and Kimberly-Clark entered into a Company Option Agreement
(the "Company Option Agreement"), giving Kimberly-Clark the right to purchase
from Safeskin approximately 14% of the authorized but previously unissued shares
of Safeskin Common Stock (the "Option Shares") at a price of $12.00 per share
upon the occurrence of certain events. Reference is made to the Company Option
Agreement, attached as Exhibit 10.1, which is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of November 17,
1999, among Safeskin Corporation, Kimberly-Clark
Corporation and Brooks Acquisition Corporation.
10.1 Company Option Agreement between Kimberly-Clark
Corporation and Safeskin Corporation, dated as of
November 17, 1999.
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C>
99.1 Joint Press Release, dated November 17, 1999, issued by
Safeskin Corporation and Kimberly-Clark Corporation.
99.2 Stockholder Agreement between Kimberly-Clark
Corporation and Richard Jaffe, dated as of November 17,
1999.
99.3 Stockholder Agreement between Kimberly-Clark
Corporation and Irving Jaffe, dated as of November 17,
1999.
99.4 Stockholder Agreement between Kimberly-Clark
Corporation and Neil Braverman, dated as of November
17, 1999.
</TABLE>
-3-
<PAGE> 4
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAFESKIN CORPORATION
By: /s/ RICHARD JAFFE
Name: Richard Jaffe
Title: Chairman, President and Chief
Executive Officer
Dated: November 17, 1999
<PAGE> 5
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of November 17,
1999, among Safeskin Corporation, Kimberly-Clark
Corporation and Brooks Acquisition Corporation.
10.1 Company Option Agreement between Kimberly-Clark
Corporation and Safeskin Corporation, dated as of
November 17, 1999.
99.1 Joint Press Release, dated November 17, 1999, issued by
Safeskin Corporation and Kimberly-Clark Corporation.
99.2 Stockholder Agreement between Kimberly-Clark Corporation
and Richard Jaffe, dated as of November 17, 1999.
99.3 Stockholder Agreement between Kimberly-Clark Corporation
and Irving Jaffe, dated as of November 17, 1999.
99.4 Stockholder Agreement between Kimberly-Clark Corporation
and Neil Braverman, dated as of November 17, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
SAFESKIN CORPORATION,
KIMBERLY-CLARK CORPORATION
AND
BROOKS ACQUISITION CORP.
DATED AS OF NOVEMBER 17, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
RECITALS ......................................................................1
ARTICLE I......................................................................2
THE MERGER; CLOSING; EFFECTIVE TIME............................................2
1.1. The Merger......................................................2
1.2. Closing.........................................................2
1.3. Effective Time..................................................2
1.4. Further Assurances..............................................3
ARTICLE II.....................................................................3
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION..........................................3
2.1. The Articles of Incorporation...................................3
2.2. The ByLaws......................................................3
ARTICLE III....................................................................3
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION............................3
3.1. Directors.......................................................3
3.2. Officers........................................................3
ARTICLE IV.....................................................................4
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES................4
4.1. Effect on Capital Stock.........................................4
4.2. Exchange of Certificates for Shares.............................4
4.3. Dissenters' Rights..............................................7
4.4. Adjustments of Conversion Number................................7
ARTICLE V......................................................................8
REPRESENTATIONS AND WARRANTIES.................................................8
5.1. Representations and Warranties of the Company...................8
5.2. Representations and Warranties of Parent and Merger Sub........19
ARTICLE VI....................................................................24
COVENANTS.....................................................................24
6.1. Interim Operations.............................................24
6.2. Takeover Proposals.............................................26
6.3. Information Supplied...........................................27
6.4. Shareholders Meeting...........................................28
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
6.5. Filings, Other Actions, Notification...........................28
6.6. Taxation.......................................................29
6.7. Access.........................................................29
6.8. Affiliates.....................................................30
6.9. Stock Exchange Listing and Delisting...........................30
6.10. Publicity.....................................................31
6.11. Stock Options, Employee Stock Purchase Plan and Benefits......31
6.12. Fees and Expenses.............................................33
6.13. Indemnification, Directors' and Officers' Insurance...........33
6.14. Takeover Statute..............................................34
6.15. Parent Vote...................................................34
6.16. Notification of Certain Matters...............................35
6.17. Real Estate Transfer and Gains Tax............................35
6.18. Additional Product Liability Insurance........................35
ARTICLE VII...................................................................36
CONDITIONS....................................................................36
7.1. Conditions to Each Party's Obligation to Effect the Merger.....36
7.2. Conditions to Obligations of Parent and Merger Sub.............37
7.3. Conditions to Obligation of the Company........................38
ARTICLE VIII..................................................................40
TERMINATION...................................................................40
8.1. Termination....................................................40
8.2. Effect of Termination..........................................42
ARTICLE IX....................................................................43
MISCELLANEOUS AND GENERAL.....................................................43
9.1. Survival......................................................43
9.2. Modification or Amendment.....................................43
9.3. Waiver of Conditions..........................................44
9.4. Counterparts..................................................44
9.5. GOVERNING LAW AND VENUE, WAIVER OF JURY TRIAL.................44
9.6. Notices......................................................45
9.7. Entire Agreement, No Other Representations...................46
9.8. No Third Party Beneficiaries.................................46
9.9. Obligations of Parent and of the Company.....................46
9.10. Severability..................................................46
9.11. Interpretation................................................46
9.12. Assignment....................................................47
9.13. Specific Performance..........................................47
9.14. Projections and ForwardLooking Information....................47
</TABLE>
-ii-
<PAGE> 4
Exhibit A - Stockholder Agreements
Exhibit B - Company Option Agreement
Exhibit C - Amended and Restated Articles of Incorporation
Exhibit D - Amendment to Company Rights Agreement
Exhibit E - Affiliates Letter
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement") dated as of November 17, 1999, among Safeskin Corporation, a
Florida corporation (the "Company"), Kimberly-Clark Corporation, a Delaware
corporation ("Parent"), and Brooks Acquisition Corp., a Florida corporation and
a wholly-owned subsidiary of Parent ("Merger Sub," the Company and Merger Sub
sometimes being hereinafter collectively referred to as the "Constituent
Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent,
Merger Sub and the Company have approved and declared advisable the merger of
Merger Sub with and into the Company (the "Merger") and approved the Merger upon
the terms and subject to the conditions set forth in this agreement, whereby
each issued and outstanding share of the Common Stock, par value $.01 per share,
of the Company (a "Share" or, collectively, the "Shares"), not owned directly or
indirectly by Parent or the Company, will be converted into shares of Common
Stock, $1.25 par value, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is fair to and in the best
interests of their respective stockholders;
WHEREAS, it is intended that, for federal income tax purposes,
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a "purchase;"
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, certain shareholders of the Company (the "Stockholders") have entered
into an agreement with Parent, in the form attached hereto as Exhibit A (the
"Company Stockholder Agreement"), pursuant to which each Stockholder has agreed,
among other things, to vote the Shares held by such Stockholder in favor of the
Merger;
WHEREAS, as a condition to Parent's willingness to enter into
this Agreement, concurrently herewith: (i) the Company and Parent are entering
into a Severance and Consulting Agreement, dated the date hereof, with Richard
Jaffe, (ii) the Company and Parent are entering into a Consulting Agreement,
dated the date hereof, with Neil K. Braverman, and (iii) the Company and Parent
are entering into Retention Agreements with certain other officers and key
employees of the Company, each dated as of the date hereof (collectively, such
Severance and Consulting Agreement, Consulting Agreement and Retention
Agreements are referred to herein as the "Executive Agreements");
<PAGE> 6
WHEREAS, as a condition to Parent's willingness to enter into
this Agreement, the Company and Parent are simultaneously entering into the
option agreement attached hereto as Exhibit B (the "Company Option Agreement")
pursuant to which the Company is granting an option to Parent to purchase Shares
on the terms and subject to the conditions set forth therein; and
WHEREAS, the Company, Parent and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the Florida Business
Corporation Act, as amended (the "FBCA"), at the Effective Time (as defined in
Section 1.3) Merger Sub shall be merged with and into the Company and the
separate corporate existence of Merger Sub shall thereupon cease. The Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation"), and the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in Articles II and III.
The Merger shall have the effects specified in Section 607.1106 of the FBCA.
1.2. Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Sidley & Austin, 717 North Harwood Avenue,
Dallas, Texas 75201 at 9:00 A.M. on the third business day after the day on
which the last to be fulfilled or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as the Company and Parent may agree in
writing (the "Closing Date").
1.3. Effective Time. As soon as practicable following the
Closing, the Company and Parent will cause Articles of Merger (the "Florida
Articles of Merger") to be executed, acknowledged and filed with the Secretary
of State of Florida as provided in Section 607.1105 of the FBCA. The Merger
shall become effective when the Florida Articles of Merger have been duly filed
with the Secretary of State of Florida or, if otherwise agreed by the Company
and Parent, such later date or time as is established by the Florida Articles of
Merger (the "Effective Time").
-2-
<PAGE> 7
1.4. Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts, agreements or things
are necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title and interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either Constituent Corporation, all such deeds, bills
of sale, assignments and assurances and to do, in the name and on behalf of
either Constituent Corporation, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title and interest in, to and under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. The Articles of Incorporation. The articles of
incorporation of the Surviving Corporation (the "Charter") shall be amended and
restated at the Effective Time to read as provided in Exhibit C.
2.2. The By-Laws. The by-laws of the Company in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation (the "By-Laws"), until thereafter amended as provided therein or by
applicable law.
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1. Directors. The directors of Merger Sub immediately prior
to the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the By-Laws.
3.2. Officers. The officers of Merger Sub immediately prior to
the Effective Time shall, from and after the Effective Time, be the officers of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the By-Laws.
-3-
<PAGE> 8
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a
result of the Merger and without any action on the part of the holder of any
capital stock of the Company:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent (collectively,
the "Parent Companies") or Shares that are owned by the Company or any direct or
indirect subsidiary of the Company and in each case not held on behalf of third
parties (collectively, "Excluded Shares")) shall be converted into, and become
exchangeable for, 0.1956 (the "Conversion Number") of a validly issued, fully
paid and nonassessable share of Parent Common Stock, together with the
corresponding fraction of a right (such rights being hereinafter referred to
collectively as the "Parent Rights") to purchase shares of Series A Junior
Participating Preferred Stock of Parent (the "Parent Series A Preferred Stock")
pursuant to the Rights Agreement, dated as of June 21, 1988, as amended and
restated as of June 8, 1995 (as so amended and restated, the "Parent Rights
Agreement") between Parent and The First National Bank of Boston, as Rights
Agent. All references in this Agreement to Parent Common Stock to be received in
accordance with the Merger shall be deemed, from and after the Effective Time,
to include the associated Parent Rights. At the Effective Time, all Shares shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each certificate (a "Certificate") formerly representing any of such
Shares (other than Excluded Shares) shall thereafter represent only the right to
receive the shares of Parent Common Stock into which such Shares have been
converted, the right to purchase the Parent Series A Preferred Stock pursuant to
the Parent Rights Agreement and the right, if any, to receive pursuant to
Section 4.2(e) cash in lieu of fractional shares into which such Shares have
been converted pursuant to this Section 4.1(a) and any distribution or dividend
pursuant to Section 4.2(c).
(b) Cancellation of Shares. Each Excluded Share issued and
outstanding immediately prior to the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, shall cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common
Stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of the
Common Stock, par value $.01 per share, of the Surviving Corporation.
4.2. Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with Boston Equiserve, L.P. or a
commercial bank having capital of not less than $5 billion selected by Parent
with the Company's prior approval, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of Shares,
-4-
<PAGE> 9
certificates representing the shares of Parent Common Stock, and, after the
Effective Time, if applicable, any cash, dividends or other distributions, with
respect to the Parent Common Stock, to be issued or paid pursuant to the next to
last sentence of Section 4.1(a) in exchange for Shares outstanding immediately
prior to the Effective Time upon due surrender of the Certificates (or
affidavits of loss and, if reasonably required by Parent, indemnity bonds in
lieu thereof) pursuant to the provisions of this Article IV (such certificates
for shares of Parent Common Stock, together with the amount of any dividends or
other distributions payable with respect thereto, being hereinafter referred to
as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates (or
affidavits of loss and, if reasonably required by Parent, indemnity bonds in
lieu thereof) to the Exchange Agent, such letter of transmittal to be in such
form and have such other provisions as Parent and the Company may reasonably
agree, and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for (A) certificates representing shares of Parent
Common Stock and (B) any unpaid dividends and other distributions and cash in
lieu of fractional shares. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Parent Common Stock
that such holder is entitled to receive pursuant to this Article IV, (y) a check
in the amount (after giving effect to any required tax withholdings) of (A) any
cash in lieu of fractional shares plus (B) any unpaid non-stock dividends and
any other dividends or other distributions that such holder has the right to
receive pursuant to the provisions of this Article IV, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
any amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock, together with a check for any cash to be paid upon due surrender
of the Certificate and any other dividends or distributions in respect thereof,
may be issued and/or paid to such a transferee if the Certificate formerly
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that (i) the Person (as defined below) requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of Parent or the Exchange Agent that such tax has been paid
or is not applicable, and (ii) the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of the Shares such amounts as
Parent or the Exchange Agent are required to deduct and withhold under the Code,
or any provision of state, local or foreign tax
-5-
<PAGE> 10
law, with respect to the making of such payment. To the extent that amounts are
so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of whom such deduction and withholding was made by Parent
or the Exchange Agent.
As used in this Agreement, the term "Person" means any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) All shares of Parent Common Stock to be delivered pursuant to the Merger
shall be deemed issued and outstanding as of the Effective Time and whenever a
dividend or other distribution is declared by Parent in respect of the Parent
Common Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares issuable pursuant to this Agreement, provided that no dividends or other
distributions declared or made in respect of the Parent Common Stock with a
record date that is 10 days or more after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby until the holder of such Certificate shall
surrender such Certificate or affidavit of loss and, if reasonably required by
Parent, indemnity bond in lieu thereof in accordance with this Article IV.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be issued and/or paid to the holder of the certificates
representing whole shares of Parent Common Stock delivered in exchange therefor,
without interest, (A) at the time of such surrender, the dividends or other
distributions with a record date at or after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid
and (B) at the appropriate payment date, the dividends or other distributions
payable with respect to such whole shares of Parent Common Stock with a record
date at or after the Effective Time but with a payment date subsequent to
surrender.
(ii) Holders of unsurrendered Certificates shall be
entitled to vote after the Effective Time at any meeting of Parent stockholders
the number of whole shares of Parent Common Stock represented by such
Certificates, regardless of whether such holders have exchanged their
Certificates.
(d) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(e) Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates pursuant to this Article IV; no dividend or other
distribution by Parent and no stock split, combination or reclassification shall
relate to any such fractional share; and no such fractional share shall entitle
the record or beneficial owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu of any such fractional share, each holder of
Shares who would otherwise have been entitled thereto upon the surrender of
Certificate(s) for exchange pursuant to this Article IV will be paid
-6-
<PAGE> 11
an amount in cash (without interest) rounded up to the nearest whole cent,
determined by multiplying (i) the per share closing price on the NYSE of Parent
Common Stock (as reported in the NYSE Composite Transactions) on the date on
which the Effective Time shall occur (or, if the Parent Common Stock shall not
trade on the NYSE on such date, the first day of trading in Parent Common Stock
on the NYSE thereafter) by (ii) the fraction of a share of Parent Common Stock
to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any Parent Common
Stock) that remains unclaimed by the shareholders of the Company for 180 days
after the Effective Time shall be paid to Parent. Any shareholders of the
Company who have not theretofore complied with this Article IV shall thereafter
look only to Parent for payment of their shares of Parent Common Stock and any
cash, dividends and other distributions in respect thereof payable and/or
issuable pursuant to Section 4.1, Section 4.2(c) or Section 4.2(e) upon due
surrender of their Certificates (or affidavits of loss and, if reasonably
required by Parent, indemnity bonds in lieu thereof), in each case, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
former holder of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate
shall have been lost, stolen or destroyed, upon the making and delivery to the
Exchange Agent of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, a properly completed letter of
transmittal and, if reasonably required by Parent, the posting by such Person of
a bond in customary amount as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock and any cash payable and any unpaid dividends or other
distributions in respect thereof pursuant to Section 4.2(c) or Section 4.2(e)
upon due surrender of, and deliverable in respect of the Shares represented by,
such Certificate pursuant to this Agreement.
4.3. Dissenters' Rights. In accordance with Section 607.1302
of the FBCA, no dissenter's rights shall be available to holders of Shares in
connection with the Merger.
4.4. Adjustments of Conversion Number. If the Company changes
the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, or Parent changes the number of shares of Parent Common
Stock or securities convertible or exchangeable into or exercisable for shares
of Parent Common Stock, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), dividend
or distribution (other than quarterly cash dividends), recapitalization, merger
(other than the Merger), subdivision, issuer tender or exchange offer for
Parent's own shares (other than repurchases by Parent between the date hereof
and the Effective Time of less than 5% of the outstanding shares of Parent
Common Stock pursuant to Rule l0b-18, promulgated under the Securities Exchange
Act of 1934, as amended), or other similar transaction with a materially
dilutive effect, or if a record date with respect to any of the foregoing shall
occur prior to the Effective Time, the Conversion Number shall be equitably
adjusted.
-7-
<PAGE> 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. Except as
set forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter"), the Company hereby represents and warrants to
Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the
Company, and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing is not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect (as
defined below). The Company has made available to Parent a complete and correct
copy of the Company's and its Subsidiaries' articles or certificates of
incorporation and by-laws, each as amended to date. The Company's and its
Subsidiaries' articles or certificates of incorporation and by-laws so made
available are in full force and effect.
As used in this Agreement, the terms (i) "Subsidiary" means,
with respect to the Company, Parent or Merger Sub, as the case may be, any
entity, whether incorporated or unincorporated, of which at least a majority of
the securities or ownership interests having by their terms ordinary voting
power to elect a majority of the Board of Directors or other persons performing
similar functions is directly or indirectly owned or controlled by such party or
by one or more of its respective Subsidiaries or by such party and any one or
more of its respective Subsidiaries and (ii) "Company Material Adverse Effect"
means a material adverse effect on the financial condition, properties or
results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change (A) in law,
rule or regulation applicable to all companies and businesses generally, or to
the disposable medical products industry specifically, or (B) in economic or
business conditions generally, or in the disposable medical products industry
specifically, shall not be considered when determining if a Company Material
Adverse Effect has occurred; and provided, further, that any such effect
resulting from the compliance by the Company with Section 6.1(c), (f) or (k)
after the date hereof and prior to the Effective Time shall not be considered
when determining if a Company Material Adverse Effect has occurred.
(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of the Company consists of 80,000,000 Shares and
10,000,000 shares of Preferred Stock, par value $.01 per share ("Company
Preferred Stock"), of which 1,000,000 shares have been designated as "Series A
Junior Participating Preferred Stock" (the "Company Series A Preferred Stock").
-8-
<PAGE> 13
(ii) At the close of business on November 3, 1999:
(A) 53,516,809 Shares were issued and outstanding,
all of which were validly issued, fully paid
and nonassessable and free of preemptive
rights;
(B) no shares of Company Preferred Stock were
issued and outstanding;
(C) no Shares were held in the treasury of the
Company or by Subsidiaries of the Company;
(D) 5,748,070 Shares were subject to issuance upon
the exercise of outstanding vested and
exercisable stock options issued under the
Company's Amended and Restated Equity
Compensation Plan (the "Company Stock Option
Plan");
(E) 4,706,612 Shares were subject to issuance upon
the exercise of outstanding unvested stock
options issued under the Company Stock Option
Plan; and
(F) 1,000,000 Shares were reserved for issuance and
unissued pursuant to the Company's Employee
Stock Purchase Plan (the "Company Stock
Purchase Plan").
(iii) Section 5.1 of the Company Disclosure Letter contains a
correct and complete list as of the date of this Agreement of each outstanding
option to purchase Shares issued under the Company Stock Option Plan or under
any other plan or agreement (collectively, the "Company Stock Options"),
including the holder, date of grant, exercise price and number of shares of
Company Common Stock subject thereto and whether the option is vested and
exercisable.
(iv) Except for the Company Option Agreement, the Company
Stock Options, the Company Stock Purchase Plan, the rights to purchase shares of
the Company Series A Preferred Stock (the "Company Rights") issued pursuant to
the Rights Agreement dated as of December 18, 1996 (the "Company Rights
Agreement") between the Company and American Stock Transfer and Trust Company,
as Rights Agent, there are no options, warrants, calls, rights or agreements to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or any of its Subsidiaries or obligating the Company or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, right or agreement, and there are no outstanding contractual rights to
which the Company or any of its Subsidiaries is a party the value of which is
based on the
-9-
<PAGE> 14
value of Shares. There are no outstanding contractual obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or any capital stock of or any equity interests in any
Subsidiary.
(v) Each outstanding share of capital stock of each Subsidiary
of the Company is duly authorized, validly issued, fully paid and nonassessable
and, except as set forth in Section 5.1 of the Company Disclosure Letter, each
such share is owned by the Company or another Subsidiary of the Company, free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever.
(vi) The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the shareholders of the Company on any matter.
(c) Corporate Authority; Approval and Fairness. As of the date
hereof, the Board of Directors of the Company has duly approved this Agreement,
the Company Option Agreement and the Executive Agreements and has resolved to
recommend the adoption of this Agreement by the Company's shareholders and
directed that this Agreement be submitted to the Company's shareholders for
approval. The Company has all corporate power and authority to enter into this
Agreement, the Company Option Agreement and the Executive Agreements and to
consummate the transactions contemplated hereby and thereby, subject to the
adoption of this Agreement by the holders of at least a majority of the
outstanding Shares (the "Company Requisite Vote"). The execution, delivery and
performance of this Agreement, the Company Option Agreement and the Executive
Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to adoption of
this Agreement by the shareholders of the Company. This Agreement, the Company
Option Agreement and the Executive Agreements have been duly executed and
delivered by the Company and (assuming the valid authorization, execution and
delivery of such agreements by each other party thereto) constitute valid and
binding agreements of the Company enforceable against the Company in accordance
with their terms, except that enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights (the
"Bankruptcy Exception") and is subject to general equity principles (the "Equity
Exception").
(d) Governmental Filings, No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and comparable international antitrust laws, the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as
amended (the "Securities Act"), (C) to comply with state securities or
"blue-sky" laws, if any, and (D) required to be made with the Nasdaq Stock
Market, no notices, reports or other filings are required to be made by the
Company or any of its Subsidiaries with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by the Company or
any of its Subsidiaries from, any governmental or regulatory authority, agency,
commission, body or
-10-
<PAGE> 15
other governmental entity ("Governmental Entity"), in connection with the
execution and delivery of this Agreement or the Company Option Agreement by the
Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby or thereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement, the Company Option Agreement and the Executive Agreements by the
Company do not, and the consummation by the Company of the Merger and the other
transactions contemplated hereby or thereby will not, constitute or result in
(A) a breach or violation of, or a default under, the articles of incorporation
or by-laws of the Company or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of the Company or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any loan or credit
agreement, note, bond, indenture or other instrument evidencing indebtedness for
borrowed money ("Debt Contracts") or any other agreement, lease, contract,
arrangement or other obligation ("Other Contracts") binding upon the Company or
any of its Subsidiaries or any Law (as defined in Section 5.1(i)) or
governmental or non-governmental permit or license to which the Company or any
of its Subsidiaries is subject or any judgment, order or decree to which the
Company or any of its Subsidiaries or any of its properties is subject or (C)
any change in the rights or obligations of any party under any of the Debt
Contracts or Other Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Company
Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement or the Company Option Agreement.
(iii) (A) There is no event of default, or event
that, but for the giving of notice or lapse of time, or both, would constitute
an event of default under any Debt Contract binding upon the Company or any of
its Subsidiaries, and (B) there is no event of default, or event that, but for
the giving of notice or lapse of time, or both, would constitute an event of
default under any Other Contract binding upon the Company or any of its
Subsidiaries which would, in the case of either clause (A) or (B), individually
or in the aggregate, be reasonably likely to have a Company Material Adverse
Effect.
(e) Company Reports, Financial Statements. Since December 31,
1997, the Company has filed all reports and other documents that it was required
to file with the Securities and Exchange Commission (the "SEC"). Each
registration statement, report, proxy statement or information statement
(including exhibits, annexes and any amendments thereto) filed by it with the
SEC (collectively, including any such reports filed subsequent to the date
hereof, the "Company Reports") since December 31, 1997 was filed with the SEC
electronically via and is available on the SEC's EDGAR system. As of their
respective dates, the Company Reports did not, and any Company Reports filed
with the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein
-11-
<PAGE> 16
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents, or will fairly present, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated statements of
operations, shareholders' equity and of cash flows included in or incorporated
by reference into the Company Reports (including any related notes and
schedules) fairly presents, or will fairly present, in all material respects,
the results of consolidated operations, shareholders' equity and cash flows, as
the case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.
(f) Absence of Certain Changes. Except as disclosed or
reflected in the Company Reports filed prior to the date hereof or disclosed or
reflected in the Company's 1998 audited financial statements, a copy of which
has been furnished to Parent (the "Audited Financials"), since December 31, 1998
the Company and its Subsidiaries have conducted their respective businesses only
in, and have not entered into or engaged in any material transaction other than
in, the ordinary and usual course of such businesses and there has not been (i)
any change in the financial condition, properties, business or results of
operations of the Company and its Subsidiaries that, individually or in the
aggregate, has had or is reasonably likely to have a Company Material Adverse
Effect; (ii) any damage, destruction or other casualty loss with respect to any
asset or property owned, leased or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance except as is not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect; (iii) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company or (iv) any material
change by the Company in accounting principles, practices or methods. Since
December 31, 1998, except as provided for herein or as disclosed in the Company
Reports filed prior to the date hereof or as disclosed or reflected in the
Audited Financials, there has not been any increase in the compensation payable
or that could become payable by the Company or any of its Subsidiaries to
officers or key employees or any amendment of any of the Compensation and
Benefit Plans (as defined in Section 5.1(h)) other than increases or amendments
in the ordinary course.
(g) Litigation and Liabilities. Except as disclosed or
reflected in the Company Reports filed prior to the date hereof or as disclosed
in the Audited Financials, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any current or former director or officer of the Company or any
of its Subsidiaries (in their capacity as such) or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise, including those
relating to matters involving any Environmental Law (as defined in Section
5.1(k)), that, in the case of either clause (i) or (ii), individually or in the
aggregate, are reasonably likely in either such case to have a Company Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement or,
the Company Option Agreement. Except as disclosed in the
-12-
<PAGE> 17
Company Reports filed prior to the date hereof or as disclosed in the Audited
Financials, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of its or their properties, assets or business, or, to the
knowledge of the executive officers of the Company, any of its or their current
or former directors or officers (in their capacity as such), that is reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
(h) Employee Matters.
(i) Neither the Company nor its Subsidiaries has any
labor contracts or collective bargaining agreements with respect to any persons
employed by the Company or its Subsidiaries. Neither the Company nor its
Subsidiaries has engaged in any unfair labor practice except as is not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. As of the date hereof, there is no unfair labor practice
complaint pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its Subsidiaries. There is no labor
strike, dispute, slowdown, or stoppage pending or, to the knowledge of the
executive officers of the Company, threatened against the Company or its
Subsidiaries, and neither the Company nor its Subsidiaries has experienced any
primary work stoppage or labor difficulty involving its employees during the
last three years, except in each case as is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
(ii) Set forth in Section 5.1(h) of the Company
Disclosure Letter is a true and complete list of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical, health, welfare,
fringe benefits or other plan, agreement, policy or arrangement which the
Company or any of its Subsidiaries maintains, or as to which the Company or any
of its Subsidiaries is or will be required to make any payment, for the benefit
of any employee, director, former employee or former director of the Company and
its Subsidiaries (the "Compensation and Benefit Plans"). The Company has
delivered or made available to Parent with respect to each Compensation and
Benefit Plan correct and complete copies, where applicable, of (i) all plan
documents and amendments thereto, trust agreements and amendments thereto and
insurance and annuity contracts and policies, (ii) the current summary plan
description, (iii) the Annual Reports (Form 5500 series) and accompanying
schedules, as filed, for the most recently completed two plan years for which
such reports have been filed, (iv) the financial statements for the most
recently completed two plan years for which statements have been prepared, (v)
the most recent determination letter issued by the Internal Revenue Service (the
"IRS") and the application submitted with respect to such letter, and (vi) all
correspondence with the IRS or Department of Labor concerning any pending
controversy. Any "change of control" or similar provisions contained in any
Compensation and Benefit Plan are specifically identified in Section 5.1(h) of
the Company Disclosure Letter.
(iii) Except as set forth in Section 5.1(h) of the
Company Disclosure Letter, all Compensation and Benefit Plans have been
established and administered in all material respects in accordance with their
terms and are in compliance in all material respects
-13-
<PAGE> 18
with all applicable laws, including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Except as set forth in Section
5.1(h) of the Company Disclosure Letter, each Compensation and Benefit Plan that
is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS,
and the Company is not aware as of the date hereof of any circumstances likely
to result in revocation of any such favorable determination letter or of any
circumstance indicating that any such plan is not so qualified in operation. As
of the date hereof, there is no pending or, to the knowledge of the executive
officers of the Company, material threatened litigation, claim (other than
routine claims for benefits) or audit by any Person relating to the Compensation
and Benefit Plans. To the knowledge of the executive officers of the Company, no
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code has occurred which would be expected to result in material liability to the
Company or its Subsidiaries.
(iv) As of the date hereof, no liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by
the Company or any Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan of
any entity which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate"). None of the Company,
its Subsidiaries and their ERISA Affiliates have contributed, or been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV or Section
302 of ERISA at any time, and no liability has been or is expected to be
incurred by the Company or any Subsidiary with respect to any such plan. None of
the Company, any of its Subsidiaries or any ERISA Affiliate contributes to or
maintains a Pension Plan subject to Title IV of ERISA or has contributed to or
maintained any such plan at any time during the six-year period prior to the
date hereof.
(v) Except as set forth in the Company Disclosure
Letter, all contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof
(vi) Except as set forth in Section 5.1(h) of the
Company Disclosure Letter and except as required under Part 6 of Title I of
ERISA, neither the Company nor its Subsidiaries have any obligations for retiree
health and life benefits under any Compensation and Benefit Plan.
(vii) Except as contemplated by this Agreement or set
forth in Section 5.1(h) of the Company Disclosure Letter, the consummation of
the Merger and the other transactions contemplated by this Agreement and the
Company Option Agreement will not (x) entitle any employees of the Company or
its Subsidiaries to severance pay or entitle them to severance pay upon their
termination of employment, (y) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits under, or increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or the Stock Plans or (z) result in any material
breach or violation of, or a material default under, any of the Compensation and
Benefit Plans or the Stock Plans.
-14-
<PAGE> 19
(viii) Set forth in Section 5.1(h)(viii) of the
Company Disclosure Letter is a list of each Compensation and Benefit Plan
maintained for the benefit of persons who are employed or reside outside the
United States of America (the "Company Foreign Benefit Plans"). The Company has
delivered copies of each Company Foreign Benefit Plan to Parent. Each Company
Foreign Benefit Plan is in compliance with and has been administered in
compliance in all material respects with all applicable laws to which such plan
is subject, and all contributions required to be made to each such plan under
the terms of the plan or any contract or collective bargaining agreement or
requirement of law have been made or accrued. Except as set forth in Section
5.1(h)(viii) of the Company Disclosure Letter, the fair market value of the
assets of each funded Company Foreign Benefit Plan, the liability of each
insurer for any Company Foreign Benefit Plan funded through insurance or the
reserve shown on the Company's consolidated financial statements for any
unfunded Company Foreign Benefit Plan, together with any accrued contributions,
is sufficient to procure or provide for the projected benefit obligations, as of
the Effective Time, with respect to all current and former participants in such
plan, using reasonable, country specific actuarial assumptions and valuations,
and no transaction contemplated by this Agreement shall cause such assets or
insurance obligations or book reserve to be less than the projected benefit
obligations.
(i) Compliance with Laws, Permit. Except as set forth in the
Company Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries are being conducted in compliance with applicable
federal, state, local and foreign laws (collectively, "Laws"), except for such
violations that, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement or the Company Option Agreement. The Company and
its Subsidiaries each has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to own or lease and operate their respective properties and conduct
its business as presently conducted except those the absence of which are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement and the Company Option Agreement.
(j) Takeover Statutes; Rights Agreement. (i) The Board of
Directors of the Company has, to the extent such statutes are applicable, taken
all action so as to render the provisions of Sections 607.0901 and 607.0902 of
the FBCA inapplicable to the Merger, the Company Option Agreement and the
Company Stockholder Agreement and the consummation of the transactions
contemplated by this Agreement, the Company Option Agreement and the Company
Stockholder Agreement. No other state takeover statute or regulation (each a
"Takeover Statute") or similar charter or bylaw provisions are applicable to the
Merger, this Agreement, the Company Option Agreement, the Company Stockholder
Agreement and the transactions contemplated hereby and thereby.
(ii) The amendment to the Company Rights Agreement in the form
of Exhibit D has been duly approved by the Company's Board of Directors and duly
executed and delivered by the Company.
-15-
<PAGE> 20
(k) Environmental Matters. Except as disclosed in the Company
Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect (i) to the knowledge of the Company, the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii)
neither the Company nor any of its Subsidiaries has received any written notices
from any Governmental Entity or any other person or entity alleging the
violation of any applicable Environmental Law (as defined below); (iii) the
Company and its Subsidiaries are not the subject of any court order,
administrative order or decree arising under any Environmental Law; (iv) to the
knowledge of the executive officers of the Company, there has not been a release
of Hazardous Substances (as defined below) on any of the properties owned or
operated by the Company or any of its Subsidiaries; and (v) to the knowledge of
the Company, neither the Company nor any of its Subsidiaries has generated,
stored, used, emitted, discharged or disposed of any Hazardous Substances in
violation of or giving rise to liability under applicable Environmental Laws.
As used in this Agreement (i) the term "Environmental Law"
means any federal, state or local law, statute, ordinance, rule, regulation,
code, license, permit, order, decree or injunction relating to the protection of
the environment (including air, water, soil and natural resources) or regulating
or imposing standards of care with respect to the use, storage, handling,
release or disposal of any Hazardous Substance, including petroleum; and (ii)
the term "Hazardous Substance" means any substance listed, defined, designated,
regulated or classified as hazardous, toxic or radioactive under any applicable
Environmental Law, including petroleum and petroleum products.
(1) Tax Matters. As of the date hereof, neither the Company
nor any of its Affiliates (as defined below) has taken or agreed to take any
action, nor do the executive officers of the Company have any knowledge of any
fact or circumstance, that would prevent the Merger and the other transactions
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. For purposes of this Agreement, an
"Affiliate" of a party is a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with it.
(m) Taxes. Except as set forth in Section 5.1(m) of the
Company Disclosure Letter, the Company and each of its Subsidiaries (i) have
prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns (as defined below)
required to be filed by any of them; (ii) have paid all Taxes (as defined below)
that are shown as due on such filed Tax Returns except for Taxes provided for in
a reserve which is adequate for the payment of such Taxes and is reflected in
the financial statements included in or incorporated by reference into the
Company Reports filed prior to the date hereof or the books and records of the
Company; and (iii) as of the date hereof, have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. There are not, to the knowledge of
the Company, any unresolved questions or claims concerning the Company's or any
of its Subsidiaries' Tax liability that are reasonably likely to have a Company
Material Adverse Effect. As of the date hereof, except as set forth in Section
5.1(m) of the Company Disclosure Letter, there are no pending or, to the
knowledge of the Company, threatened audits, examinations, investigations or
other proceedings
-16-
<PAGE> 21
in respect of Taxes or Tax matters. The Company has made available to Parent
true and correct copies of the United States federal income Tax Returns filed by
the Company and its Subsidiaries for each of the years ended 1995, 1996, 1997
and 1998. The Company is not, nor has it ever been, a party to any Tax sharing
agreement and has not assumed the Tax liability of any other person. Except as
may be limited by the transactions contemplated by this Agreement, the "regular"
and, if applicable, "alternative minimum tax" net operating loss carryforwards
of the Company and its Subsidiaries for each of the taxable years ended on or
prior to December 31, 1998 (collectively, the "NOLs") are set forth (for each
year) in the Company Disclosure Letter and are each available to the Company or
the applicable Subsidiary for a period of fifteen taxable years from the end of
the taxable year in which the applicable NOL was incurred; and except as may be
limited as a result of the transactions contemplated by this Agreement,
immediately prior to the Effective Time, none of the NOLs will constitute
separate return limitation year (SRLY) losses, consolidated return change of
ownership (CRCO) losses or "dual consolidated losses" and none of the NOLs will
be limited by sections 382 or 384 of the Code and the regulations thereunder. To
the knowledge of the executive officers of the Company, the representations set
forth in the Company Tax Certificate (as defined in Section 7.2(d)) attached to
the Company Disclosure Letter are true and correct in all material respects.
As used in this Agreement (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes" and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(n) Intellectual Property; Year 2000 Compliance.
(i) The Company and/or its Subsidiaries owns all
right, title and interest to, or has the right to use pursuant to a valid
license (each of which licenses is listed under Section 5.1(n) of the Company
Disclosure Letter), as the case may be, all Intellectual Property Rights (as
defined below) used in the business of the Company and its Subsidiaries as
presently conducted, except for any failure to own or right to use that,
individually or in the aggregate, is not reasonably likely to have a Company
Material Adverse Effect. None of the Intellectual Property Rights are subject to
any lien of any third party recorded in the U.S. Patent and Trademark Office.
(ii) All government grants of Intellectual Property Rights
owned by the Company or any Subsidiary are valid and in force, except for any
invalidity or unenforceability that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect. All applications
for government grants of Intellectual Property Rights filed by the Company or
any Subsidiary are pending and in good standing, all without challenge of any
kind, except for any lack of good standing or challenge that, individually or in
the aggregate, is not reasonably likely to have a Company Material Adverse
Effect. The Intellectual Property
-17-
<PAGE> 22
Rights owned by the Company or any of its Subsidiaries are valid and
enforceable, except for any invalidity or unenforceability that, individually or
in the aggregate, is not reasonably likely to have a Company Material Adverse
Effect. The Company or its Subsidiaries have the sole and exclusive right to
bring actions for infringement, misappropriation or unauthorized use of Owned
Software (as defined below) and the Intellectual Property Rights owned by the
Company and its Subsidiaries, except for any rights that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
(iii) Except as is not reasonably likely to have a Company
Material Adverse Effect:
(A) neither the Company nor any of its Subsidiaries
is, nor will the Company or any of its Subsidiaries be, as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any license, sublicense or other agreement as to
which the Company or any of its Subsidiaries is a party and pursuant to which
the Company or any of its Subsidiaries is authorized to use any third-party
Intellectual Property Rights or computer software programs or applications;
(B) to the knowledge of the Company, there are no
infringements, misappropriations or violations of any Intellectual Property
Rights of any other person that has occurred or results in any way from the
operations of the respective businesses of the Company or its Subsidiaries; no
claim of any infringement, misappropriation or violation of any Intellectual
Property Rights of any other person has been made or asserted in respect of the
operations of the respective businesses of the Company or its Subsidiaries; and
neither the Company nor any of its Subsidiaries has had notice of, nor does the
Company have knowledge of any valid grounds for, any bona fide claim against the
Company or its Subsidiaries that its Intellectual Property Rights, operations,
activities, products, software, equipment, machinery or processes infringe,
misappropriate or violate any Intellectual Property Rights of any other Person;
(C) (i) the Company or its Subsidiaries have
maintained and protected the software that each owns (the "Owned Software"),
including all source code and system specifications associated with such
software, with such measures as are reasonably necessary to protect the
proprietary, trade secret or confidential information contained therein; and
(ii) the executive officers of the Company do not know of any infringement,
misappropriation or violation of any Intellectual Property Rights of any other
person with respect to the Owned Software; and
(D) all employees, agents, consultants, or
contractors who have contributed to or participated in the creation or
development of inventions, discoveries, trade secrets, copyrightable works or
ideas on behalf of the Company, any of its Subsidiaries or any predecessor in
interest thereto, if and only if necessary to vest ownership rights in such
material with the Company and/or the Subsidiaries, either: (a) is a party to a
"work-for hire" agreement under which the Company or a Subsidiary (or such
predecessor in interest, as applicable), is deemed to be the original
owner/author of all property rights therein; or (b) has executed an assignment
or an agreement to assign in favor of the Company or a Subsidiary (or such
-18-
<PAGE> 23
predecessor in interest, as applicable), all right, title and interest in such
inventions, discoveries, trade secrets, copyrightable works, or ideas.
(iv) The Company has paid all maintenance and annuity fees for
all patents and patent applications that are material to the Company and its
Subsidiaries.
(v) The software, operations, systems and processes
(including, to the knowledge of the Company, software, operations, systems and
processes obtained from third parties) used in the conduct of the business of
the Company and its Subsidiaries are Year 2000 Compliant except where the
failure to be Year 2000 Compliant would not, individually or in the aggregate,
have a Material Adverse Effect on the Company and the Company has delivered to
Parent true and correct copies of any consultant or other third-party reports
prepared on behalf of the Company with respect to such compliance.
(vi) As used in this Agreement, the term (i) "Intellectual
Property Rights" means: (A) all United States and foreign patents, patent
applications, continuations, continuations-in-part, continuing prosecution
applications, divisions, reissues, patent disclosures, extensions,
re-examinations, inventions (whether or not patentable) or improvements thereto;
(B) all United States, state, foreign, and common law trademarks, service marks,
domain names, logos, trade dress and trade names (including all assumed or
fictitious names under which the Company and each Subsidiary is conducting its
business), whether registered or unregistered, and pending applications to
register the foregoing; (C) all United States and foreign copyrights, whether
registered or unregistered and pending applications to register the same; and
(D) all confidential ideas, trade secrets, know-how, concepts, methods,
processes, formulae, reports, data, customer lists, mailing lists, business
plans and other proprietary information; and (ii) "Year 2000 Compliant" means
the ability of computers, computer software and computerized devices to process
(including calculate, compare, sequence, display or store), transmit or receive
date data from, into and between the twentieth and twenty-first centuries, and
the years 1999 and 2000, and leap year calculations without error or
malfunction.
(o) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement, except
that the Company has employed Morgan Stanley & Co. Incorporated as its financial
advisor, pursuant to arrangements which have been disclosed to Parent prior to
the date hereof.
5.2. Representations and Warranties of Parent and Merger Sub.
Except as set forth in the corresponding sections or subsections of the
disclosure letter delivered to the Company by Parent on or prior to entering
into this Agreement (the "Parent Disclosure Letter"), Parent and Merger Sub each
hereby represents and warrants to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock
of Merger Sub consists of 100 shares of Common Stock, par value $0.01 per share,
100 shares of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (i) no other shares of capital
-19-
<PAGE> 24
stock or voting securities of Merger Sub, (ii) no securities of Merger Sub
convertible into or exchangeable for shares of capital stock or voting
securities of Merger Sub and (iii) no options or other rights to acquire from
Merger Sub, and no obligations of Merger Sub to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Merger Sub. Merger Sub has not conducted any business prior
to the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of
Parent and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing is not reasonably likely
to have, individually or in the aggregate, a Parent Material Adverse Effect (as
defined below). Parent has made available to the Company a complete and correct
copy of Parent's and Merger Sub's certificates of incorporation and by-laws,
each as amended to the date hereof. Parent's and Merger Sub's certificates of
incorporation and by-laws so made available are in full force and effect.
As used in this Agreement, the term "Parent Material Adverse
Effect" means a material adverse effect on the financial condition, properties
or results of operations of the Parent and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change (A) in law,
rule or regulation applicable to all companies and businesses generally or to
the consumer products, tissue, paper or forest products industries specifically,
or (B) in economic or business conditions generally, or in the consumer
products, tissue, paper or forest products industries specifically, shall not be
considered when determining if a Parent Material Adverse Effect has occurred.
(c) Capital Structure. The authorized capital stock of Parent
consists of 1,200,000,000 shares of Parent Common Stock, and 20,000,000 shares
of Preferred Stock, without par value (the "Parent Preferred Stock"), of which
2,000,000 shares have been designated as Series A Junior Participating Preferred
Stock (the "Parent Series A Preferred Stock"). As of November 8, 1999,
544,347,148 shares of Parent Common Stock were outstanding, and no shares of
Parent Preferred Stock were issued and outstanding. All of the shares of Parent
Common Stock deliverable in exchange for the Shares at the Effective Date in
accordance with this Agreement and all of the shares of Parent Series A
Preferred Stock deliverable to the holders of such Parent Common Stock pursuant
to the Parent Rights Agreement if and when deliverable to them under the Parent
Rights Agreement will be, when so issued, duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights. All of the outstanding
shares of Parent Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. Parent has no Parent Common Stock or Parent
Preferred Stock reserved for issuance, except that, as of November 8, 1999, (i)
there were 2,000,000 shares of Parent Series A Preferred Stock reserved for
issuance under the Parent Rights Agreement, and (ii) there were not
-20-
<PAGE> 25
more than 20,457,146 options to purchase Parent Common Stock outstanding. Except
as set forth above or in the Parent Reports (as defined in Section 5.2(f)), as
of the date hereof there are no preemptive or other outstanding rights, options,
warrants, conversion rights, redemption rights, repurchase rights, agreements,
arrangements or commitments by Parent to issue or to sell any shares of Parent
Common Stock or Parent Preferred Stock or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire Parent Common Stock or Parent Preferred Stock,
and no securities or obligation evidencing such rights are authorized, issued or
outstanding.
(d) Corporate Authority.
(i) No vote of holders of capital stock of Parent is necessary
to approve this Agreement and the Merger and the other transactions contemplated
hereby. The execution, delivery and performance of this Agreement, the Company
Option Agreement and any Executive Agreements to which Parent is a party by
Parent and, where applicable, Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Parent and, where
applicable, Merger Sub. This Agreement, the Company Option Agreement and any
Executive Agreements to which Parent is a party have been duly executed and
delivered by Parent and, where applicable, Merger Sub and (assuming the valid
authorization, execution and delivery of such agreements by the other parties
thereto) constitute the valid and binding agreements of Parent and, where
applicable, Merger Sub, enforceable against each of Parent and, where
applicable, Merger Sub in accordance with their terms, except that
enforceability may be limited by the Bankruptcy Exception and is subject to the
Equity Exception.
(ii) Prior to the Effective Time, Parent will have taken all
necessary action to permit it to deliver the number of shares of Parent Common
Stock required to be delivered pursuant to Article IV.
(e) Governmental Filings, No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, and
comparable international antitrust laws, the Securities Act and the Exchange
Act, (C) to comply with state securities or "blue sky" laws, if applicable (D)
required to be made with the NYSE and (E) pursuant to Section 6.17, no notices,
reports or other filings are required to be made by Parent or any of its
Subsidiaries, including Merger Sub, with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Parent or any of
its Subsidiaries, including Merger Sub, from, any Governmental Entity, in
connection with the execution and delivery of this Agreement, the Company Option
Agreement and any Executive Agreements to which Parent is a party by Parent and,
where applicable, Merger Sub and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby and thereby, except
those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent, materially delay or materially impair the ability of Parent or Merger
Sub to consummate the transactions contemplated hereby and thereby.
(ii) The execution, delivery and performance of this
Agreement, the Company Option Agreement and any Executive Agreements to which it
is a party by Parent and,
-21-
<PAGE> 26
where applicable, Merger Sub do not, and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby and thereby
will not, constitute or result in (A) a breach or violation of, or a default
under, the certificate of incorporation or by-laws of Parent or Merger Sub or
the comparable governing instruments of any of their respective Subsidiaries,
(B) a breach or violation of, or a default under, or an acceleration of any
obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of Parent or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any Debt Contracts or Other
Contracts binding upon Parent or any of its Subsidiaries or any Law or
governmental or non-governmental permit or license to which Parent or any of its
Subsidiaries is subject or any judgment, order or decree to which the Parent or
any of its Subsidiaries or any of its properties is subject or (C) any change in
the rights or obligations of any party under any such Debt Contracts or Other
Contracts, except, in the case of clause (B) or (C) above, for any breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to have a Parent Material Adverse Effect
or prevent, materially delay or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated hereby and thereby.
(f) Parent Reports, Financial Statements. Each registration
statement, report, proxy statement or information statement filed by Parent with
the SEC since December 31, 1997 (including exhibits, annexes and any amendments
thereto) (collectively, including any such reports filed subsequent to the date
hereof, the "Parent Reports") was filed with the SEC electronically via and is
available on the SEC's EDGAR system. As of their respective dates, the Parent
Reports did not, and any Parent Reports filed with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Except as disclosed in the Parent Disclosure Letter, each of the
consolidated balance sheets included in or incorporated by reference into the
Parent Reports (including the related notes and schedules) fairly presents, or
will fairly present, in all material respects, the consolidated financial
position of Parent and its Subsidiaries as of its date and each of the
consolidated statements of income and cash flows included in or incorporated by
reference into the Parent Reports (including any related notes and schedules)
fairly presents, or will fairly present, in all material respects, the results
of operations and changes in financial position, as the case may be, of Parent
and its Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein.
(g) Absence of Certain Changes. Except as disclosed in the
Parent Reports filed prior to the date hereof, since December 31, 1998 Parent
and its Subsidiaries have conducted their respective businesses only in, and
have not entered into or engaged in any material transaction other than in the
ordinary and usual course of business and there has not been (i) any change in
the financial condition, properties, business or results of operations of Parent
and its Subsidiaries that, individually or in the aggregate, has had or is
reasonably likely to result in a Parent Material Adverse Effect; (ii) any
damage, destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by Parent or any of its Subsidiaries, whether or
not covered by insurance, except as is not reasonably likely to have,
-22-
<PAGE> 27
individually or in the aggregate, a Parent Material Adverse Effect; (iii) any
material change by Parent in accounting principles, practices or methods; or
(iv) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of Parent, except for dividends or
other distributions on its capital stock publicly announced prior to the date
hereof or Parent's regular quarterly dividends or increases in such dividends
which are not materially in excess of past practice.
(h) Litigation and Liabilities. Except as disclosed in the
Parent Reports filed prior to the date hereof, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the executive officers of Parent,
threatened against Parent or any of its Subsidiaries or any current or former
director or officer of Parent or any of its Subsidiaries (in their capacity as
such) or (ii) obligations or liabilities, whether or not accrued, contingent or
otherwise, including those relating to matters involving any Environmental Law,
that, in the case of either clause (i) or (ii), individually or in the
aggregate, are reasonably likely, in either such case, to have a Parent Material
Adverse Effect or prevent or materially burden or materially impair the ability
of Parent or Merger Sub to consummate the transactions contemplated by this
Agreement. Except as disclosed in the Parent Reports filed prior to the date
hereof, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against the Parent or any of its
Subsidiaries, any of its or their properties, assets or business, or, to the
knowledge of the executive officers of the Parent, any of its or their current
or former directors or officers (in their capacity as such), that is reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(i) Compliance with Laws, Permits. Except as set forth in the
Parent Reports filed prior to the date hereof, the businesses of each of Parent
and its Subsidiaries are being conducted in compliance with applicable Laws,
except for such violations that, individually or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement. Parent and its
Subsidiaries each has all permits, licenses, trademarks, patents, trade names,
copyrights, service marks, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to own or lease
and operate their respective properties and conduct its business as presently
conducted except those the absence of which are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or prevent
or materially burden or materially impair the ability of Parent or Merger Sub to
consummate the Merger and the other transactions contemplated by this Agreement.
(j) Environmental Matters. Except as disclosed in the Parent
Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Parent
Material Adverse Effect: (i) to the knowledge of the executive officers of
Parent, Parent and its Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) neither Parent nor any of its Subsidiaries has received
any written notice from any Governmental Entity or any other person or entity
alleging the violation of any applicable Environmental Law; (iii) Parent and its
Subsidiaries are not the subject of any court order, administrative order or
decree arising under any Environmental Law; (iv) to the knowledge of the
executive officers of Parent, there has not been a release of Hazardous
-23-
<PAGE> 28
Substances on any of the properties owned or operated by Parent or any of its
Subsidiaries; and (v) to the knowledge of Parent, neither Parent nor any of its
Subsidiaries has generated, stored, used, emitted, discharged or disposed of any
Hazardous Substances in violation of or giving rise to liability under
applicable Environmental Laws.
(k) Tax Matters. As of the date hereof, neither Parent nor any
of its Affiliates has taken or agreed to take any action, nor do the executive
officers of Parent have any knowledge of any fact or circumstance, that would
prevent the Merger and the other transactions contemplated by this Agreement
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code.
(1) Ownership of Shares. Except as to Shares which may be
acquired by Parent pursuant to the Company Option Agreement, neither Parent nor
any of its Subsidiaries is the "Beneficial Owner" (as such term is defined in
Rule l3d-3 of the Exchange Act) of any Shares.
(m) Brokers and Finders. Neither Parent nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
6.1. Interim Operations. The Company covenants and agrees as
to itself and each of its Subsidiaries that, after the date hereof and prior to
the Effective Time (unless Parent shall otherwise approve, and except as set
forth in the Company Disclosure Letter or as otherwise expressly contemplated by
this Agreement):
(a) the business of it and its Subsidiaries shall be conducted
in the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) neither it nor any of its Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any capital stock owned by it or any of its
Subsidiaries in any of its Subsidiaries or other Affiliates; (ii) amend its
certificate or articles of incorporation or by-laws; (iii) split, combine or
reclassify its outstanding shares of capital stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly-owned
Subsidiaries; (v) repurchase, redeem or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its
-24-
<PAGE> 29
capital stock or any securities convertible into or exchangeable or exercisable
for any shares of its capital stock; or (vi) redeem the Company Rights or amend
the Company Rights Agreement;
(c) neither it nor any of its Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class (other than Shares issuable pursuant to options outstanding on
November 15, 1999 under the Stock Plans); (ii) purchase, transfer, lease, sell,
mortgage, pledge, dispose of or encumber any real property or effect any
improvements or expansions thereon; (iii) other than in the ordinary and usual
course of business, purchase, transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any other property or assets (including
capital stock of any of its Subsidiaries) or incur or modify any material
indebtedness or other liability; (iv) make or authorize or commit for any
capital expenditures (including any significant changes to current projects)
other than for those projects that are in the ordinary and usual course of
business consistent with past practice and are identified for the fourth quarter
of 1999 as set forth in Schedule 6.1(c) of the Company Disclosure Letter; or (v)
by any means, make any acquisition of, or investment in, any business through
acquisition of assets or stock of any other Person or entity;
(d) except as may be required by applicable law, and except as
provided in Section 6.11, neither it nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify any Compensation and Benefit Plans or increase the
salary, wage, bonus, severance, incentive or other compensation of any employees
located in the United States or, except for salary or wage increases occurring
in the ordinary and usual course of business and consistent with past practice,
increase the salary, wage, bonus, severance, incentive or other compensation of
any employees located outside of the United States;
(e) neither it nor any of its Subsidiaries shall settle or
compromise any material claims or litigation, and as to such litigation the
Company will allow Parent to actively participate as a consultant and will
provide Parent with regular reports regarding the status thereof;
(f) neither it nor any of its Subsidiaries shall enter into,
modify, amend or terminate any Debt Contract or, (i) except in the ordinary and
usual course of business and subject to the provisions set forth in Section
6.1(f) of the Company Disclosure Letter and (ii) except as permitted by Section
6.1(c)(iv), enter into any material Other Contracts or modify, amend or
terminate any of its material Other Contracts or waive, release or assign any
material rights or claims;
(g) neither it nor any of its Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and usual
course of business, provided that neither it nor any of its Subsidiaries shall
permit any such policy providing coverage for product liability, securities law
claims or shareholder derivative claims to be terminated or canceled;
-25-
<PAGE> 30
(h) neither it nor any of its Subsidiaries shall take any
action, other than reasonable and usual actions in the ordinary and usual course
of business consistent with past practice, with respect to accounting policies
or procedures, except as may be required by changes in GAAP (in which case the
Company will so advise Parent in advance in writing);
(i) neither it nor any of its Subsidiaries shall sell,
transfer, assign or abandon any patents or trademarks which are owned or
controlled directly or indirectly by the Company or any of its Subsidiaries,
except for any intercompany transfer among the Company and its Subsidiaries, in
either case, in the ordinary and usual course of business;
(j) neither it nor any of its Subsidiaries shall license or in
any way encumber any patents or trademarks which are owned or controlled
directly or indirectly by the Company or any of its Subsidiaries, except in the
ordinary and usual course of business;
(k) except as set forth in Section 6.1(k) of the Company
Disclosure Letter, neither it nor any of its Subsidiaries shall make any new
offer of distributor or other customer incentives or promotions that are
different than those prevailing at the date hereof and each of it and its
Subsidiaries shall use reasonable efforts to cause inventory levels at the
Company's distributors to be maintained at the lowest practicable level
consistent with meeting end-user demand;
(l) neither it nor any of its Subsidiaries shall authorize or
announce an intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing;
(m) the Company shall promptly notify Parent if the Company or
its Subsidiaries become aware of any material infringement by the Company or its
Subsidiaries of the Intellectual Property Rights of any third party or any
material infringement by a third party of the Company's or its Subsidiaries'
Intellectual Property Rights; and
(n) the Company shall timely pay all maintenance and annuity
fees for its and its Subsidiaries' patents and patent applications.
6.2. Takeover Proposals. (a) From and after the date hereof,
the Company shall not, and shall use its best efforts not to permit any of its
directors, officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit, initiate or knowingly encourage (including by way of furnishing
information) any Takeover Proposal (as hereinafter defined) from any Person, or
engage in or continue discussions or negotiations relating to any Takeover
Proposal; provided, however, that the Company may engage in discussions or
negotiations with, and furnish information to, any Person that makes a written
Takeover Proposal in respect of which the Board of Directors of the Company
concludes in good faith if consummated would constitute a Superior Proposal (as
hereinafter defined), but only if the Board of Directors of the Company shall
conclude in good faith, after receipt of advice from its outside counsel, that
the failure to take such action would be inconsistent with the fiduciary
obligations of such Board of Directors under applicable law; and provided
further that notwithstanding anything to the contrary herein contained, the
Board of
-26-
<PAGE> 31
Directors of the Company may take and disclose to the Company's shareholders a
position contemplated by Rule 14e-2 promulgated under the Exchange Act, comply
with Rule l4d-9 thereunder and make all disclosures required by applicable law
in connection therewith. The Company shall as soon as practicable and in any
event no later than the date on which such Takeover Proposal is presented to the
Company's Board of Directors notify Parent of any Takeover Proposal received by
it or any of its directors, officers, employees, attorneys, financial advisors,
agents or other representatives or those of any of its Subsidiaries or the
receipt by the Company or any of the foregoing of any notice of any intention to
make a Superior Proposal, including the identity of the person making such
Takeover Proposal or intending to make a Superior Proposal and the material
terms of any such Takeover Proposal. The Company will keep Parent fully informed
of the status and details of any such Takeover Proposal or inquiry.
(b) As used in this Agreement (i) "Takeover Proposal" means
any proposal or offer (other than a proposal or offer by Parent or any of its
Affiliates) by any Person relating to any actual or potential merger,
consolidation or other business combination involving the Company or any of its
Significant Subsidiaries (as defined below) or any acquisition in any manner
(including by tender or exchange offer) of 15% or more of the outstanding
capital stock of the Company or of any of its Significant Subsidiaries, or of
the assets of the Company or its Subsidiaries comprising 15% or more of the
assets of the Company and its Subsidiaries taken as a whole; (ii) "Superior
Proposal" means a bona fide proposal or offer made by any Person (x) to acquire
the Company pursuant to any tender or exchange offer or any acquisition of all
or substantially all of the assets of the Company and its Subsidiaries as a
whole or (y) to enter into a merger, consolidation or other business combination
with the Company or any of its Subsidiaries, in each case on terms which a
majority of the members of the Board of Directors of the Company determines in
good faith, after receipt of advice from its independent financial advisors, to
be more favorable to the Company and its shareholders than the transactions
contemplated hereby (including any revised transaction proposed by Parent
pursuant to Section 8.1(f)); and (iii) "Significant Subsidiary" means any
Subsidiary that would constitute a "significant subsidiary" within the meaning
of Rule 1-02 of Regulation S-X of the SEC.
(c) During the period from the date of this Agreement through
the Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality agreement pertaining to the Company or its
Subsidiaries or any standstill agreement to which it or any of its Subsidiaries
is a party. During such period, the Company shall enforce, to the fullest extent
permitted under applicable law, but subject to the exercise by the Board of
Directors of the Company of their fiduciary obligations after consultation with
outside counsel, the provisions of any such agreement, including by obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
of America or of any state having jurisdiction.
6.3. Information Supplied. The Company and Parent each agrees,
as to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it or its Subsidiaries for inclusion or incorporation by
reference in (i) the Registration Statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (including the proxy statement and prospectus (the "Prospectus/Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4
-27-
<PAGE> 32
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus/Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to the Company's shareholders and at the time of
the meeting of shareholders of the Company to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.4. Shareholders Meeting. The Company will take, in
accordance with applicable law and its articles of incorporation and by-laws,
all action necessary to convene a meeting of holders of Shares (the
"Shareholders Meeting") as promptly as practicable after the S-4 Registration
Statement is declared effective to consider and vote upon the approval of this
Agreement. The Company's Board of Directors shall recommend such approval and
shall take all lawful action to solicit such approval; provided, however, that
the Company's Board of Directors shall not be required to make, and shall be
entitled to withdraw, such recommendation (and cease such solicitation) if such
Board of Directors concludes in good faith, after receipt of advice from its
outside counsel, that the making of, or the failure to withdraw, such
recommendation would be inconsistent with the fiduciary obligations of such
Board of Directors under applicable law.
6.5. Filings, Other Actions, Notification. (a) Parent and the
Company shall promptly prepare and file with the SEC the Prospectus/Proxy
Statement, and Parent shall prepare and file with the SEC the S-4 Registration
Statement as promptly as practicable. Parent shall use its best efforts (and the
Company shall cooperate therewith) to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and promptly thereafter Parent and the Company shall mail the
Prospectus/Proxy Statement to the shareholders of the Company. Parent shall also
use its best efforts to obtain prior to the effective date of the S-4
Registration Statement all necessary state securities law or "blue sky" permits
and approvals, if any, required in connection with the Merger and to consummate
the other transactions contemplated by this Agreement and will pay all expenses
incident thereto.
(b) The Company and Parent each shall use its best efforts to
cause to be delivered to the other party and its directors a letter of its
independent auditors, dated (i) the date on which the S-4 Registration Statement
shall become effective and (ii) the Closing Date, and addressed to the other
party and its directors, in form and substance customary for "comfort" letters
delivered by independent public accountants in connection with registration
statements similar to the S-4 Registration Statement.
(c) The Company and Parent shall cooperate with each other and
use (and shall cause their respective Subsidiaries to use) their respective best
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and responding promptly to any
requests for further information, in order
-28-
<PAGE> 33
to obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement as promptly as
practicable. Subject to applicable laws relating to the exchange of information,
Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other on, all the information relating
to the other and any of its respective Subsidiaries that appear in any filing
made with, or written materials submitted to, any third party and/or any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
Company and Parent shall act reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the
other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the Prospectus/Proxy
Statement, the S-4 Registration Statement or any other statement, filing, notice
or application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Merger and the transactions contemplated by this Agreement.
(e) The Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
(f) Without limiting the generality of the undertakings
pursuant to this Section 6.5, (i) the Company and Parent agree to provide
promptly to any and all federal, state, local or foreign court or Government
Entity with jurisdiction over enforcement of any applicable antitrust laws
("Government Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the Merger and the transactions contemplated by this Agreement
and the Company Option Agreement; and (ii) in connection with any filing or
submission or other action required to be made or taken by either Parent or the
Company to effect the Merger and to consummate the other transactions
contemplated hereby or thereby, the Company shall not, without Parent's prior
written consent, commit to any divestiture transaction, and neither Parent nor
any of its Affiliates shall be required to divest or hold separate or otherwise
take or commit to take any action that limits its freedom of action with respect
to, or its ability to retain, the Company or, in any material respect, any
portions thereof or any of the business, product lines, properties or assets of
Parent or any of its Affiliates.
6.6. Taxation. Subject to Section 6.2, neither Parent nor the
Company shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
-29-
<PAGE> 34
6.7. Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, the Company shall (and shall cause its
Subsidiaries to) afford Parent's officers, employees, counsel, accountants and
other authorized representatives ("Representatives") access, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records (including its audit work papers and
related documents) and, during such period, shall (and shall cause its
Subsidiaries to) furnish promptly to Parent all information concerning its
business, properties and personnel as may reasonably be requested, provided that
no investigation pursuant to this Section shall affect or be deemed to modify
any representation or warranty made by the Company, and provided, further, that
the foregoing shall not require the Company to permit any inspection, or to
disclose any information, that in the reasonable judgment of the Company, would
conflict with applicable laws relating to the exchange of information or result
in the disclosure of any trade secrets of it or third parties or violate any of
its obligations with respect to confidentiality if the Company shall have used
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. All requests for information made pursuant to this Section shall
be directed to an executive officer of the Company or such Person as may be
designated by the Company's officers. In requesting information hereunder,
Parent shall cause its Representatives to act in a manner reasonably designed to
minimize, to the extent practicable, disruption of the normal business
operations of the Company and its Subsidiaries. Parent and the Company shall
each designate two representatives to meet on a monthly basis to discuss the
Company's capital expenditures, inventory management, sales promotions,
distribution arrangements, construction projects, group purchasing organization
contracts, other material contracts, patent licenses and such other business
matters concerning the Company's operations as are desired. All such information
shall be governed by the terms of the Confidentiality Agreement (as defined in
Section 8.2).
6.8. Affiliates. Prior to the Effective Time, the Company
shall deliver to Parent a list of names and addresses of those Persons who are,
in the opinion of the Company, as of the time of the Shareholders Meeting,
"affiliates" of the Company within the meaning of Rule 145 under the Securities
Act. The Company shall provide to Parent such information and documents as
Parent shall reasonably request for purposes of reviewing such list. There shall
be added to such list the names and addresses of any other Person subsequently
identified by either Parent or the Company as a Person who may be deemed to be
such an affiliate of the Company; provided, however, that no such Person
identified by Parent shall be added to the list of affiliates of the Company if
Parent shall receive from the Company, on or before the date of the Shareholders
Meeting, an opinion of counsel reasonably satisfactory to Parent to the effect
that such Person is not such an affiliate. The Company shall exercise its best
efforts to deliver or cause to be delivered to Parent, prior to the date of the
Shareholders Meeting, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit E (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the S-4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Parent Common Stock by such
affiliates received in the Merger and the certificates representing Parent
Common Stock received by such affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section.
-30-
<PAGE> 35
6.9. Stock Exchange Listing and Delisting. Parent shall use
its best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date. The Surviving Corporation shall use its
best efforts to cause the Shares to no longer be quoted on the Nasdaq Stock
Market and de-registered under the Exchange Act as soon as practicable following
the Effective Time.
6.10. Publicity . The initial press releases by Parent and the
Company concerning this Agreement and the transaction contemplated hereby shall
be mutually agreed as to content prior to issuance and thereafter the Company
and Parent shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings with
any third party and/or any Governmental Entity (including any national
securities exchange) with respect thereto, except as may be required by law or
by obligations pursuant to any listing agreement with or rules of any national
securities exchange.
6.11. Stock Options, Employee Stock Purchase Plan and
Benefits.
(a) Stock Options. (i) Prior to the Effective Time, the
Company shall take all action necessary to permit each current or former
employee or director of the Company or any of its Subsidiaries who holds a
Company Stock Option to elect in writing, not later than 10 days prior to the
Effective Time, that each and every Company Stock Option held by such option
holder immediately prior to the Effective Time shall become and represent an
option to purchase the number of shares of Parent Common Stock (a "Substitute
Option"), decreased to the nearest whole share, determined by multiplying the
number of shares of Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time by the Conversion Number, at an exercise
price per share of Parent Common Stock (increased to the nearest whole cent)
equal to the exercise price per share of Company Common Stock immediately prior
to the Effective Time divided by the Conversion Number. Parent shall pay cash to
the holders of Substitute Options in lieu of issuing fractional shares of Parent
Common Stock upon the exercise thereof. After the Effective Time, each
Substitute Option shall be exercisable upon substantially the same terms and
conditions as were applicable to the related Company Stock Option immediately
prior to the Effective Time, except as follows. By electing a Substitute Option,
each such option holder shall agree that the Substitute Option shall be
exercisable in accordance with the vesting schedule in effect immediately prior
to the Effective Time, without regard to any acceleration of exercisability
otherwise applicable under the Company Stock Option Plan or any agreement
thereunder as a result of the transactions contemplated by this Agreement,
except as described below. Except as otherwise set forth in an Executive
Agreement, Parent shall cause each Substitute Option to be fully exercisable if
the employment or service of the holder of such option is terminated by the
Company or one of its Subsidiaries without cause (including a director ceasing
to serve as a member of the Company's Board of Directors as a result of the
transactions contemplated by this Agreement) at the Effective Time, within one
year after the Effective Time, or during the term of an Executive Agreement
between the Company and such option holder. Except as otherwise set forth in an
Executive Agreement, each Substitute Option shall be exercisable following the
termination of the option holder's employment or service with the Company or one
of its Subsidiaries without
-31-
<PAGE> 36
cause for the period ending 90 days after the date of such termination or, if
later, 90 days after the expiration of a reasonable period of time after the
Effective Time, not longer than 30 days, during which the options are subject to
exercise restrictions for administrative reasons; provided, however, that no
Substitute Option shall be exercisable later than 10 years (or five years, in
the case of an option with a five year term) after the date such option was
granted by the Company.
(ii) Prior to the Effective Time, the Company shall take all
action necessary to cause each Company Stock Option outstanding immediately
prior to the Effective Time, whether or not then exercisable, that does not
become a Substitute Option pursuant to Section 6.11(a)(i) to be cancelled
immediately after the Effective Time, in consideration for which the holder
thereof shall be entitled to receive a cash payment from the Company equal to
the product of (A) the number of shares subject to such Company Stock Option
(whether or not exercisable) times (B) the excess, if any, of $12.00 over the
exercise price of such Company Stock Option. The Committee, within the meaning
of the Company Stock Option Plan, shall take all action necessary to authorize
the cash payments required under the preceding sentence, including the
designation of an appropriate 60-day period during which the "Change in Control
Price" within the meaning of the Company Stock Option Plan is determined. The
Company shall withhold from each payment pursuant to this Section 6.11(a)(ii)
all applicable federal, state and local Taxes required to be withheld in respect
of such payment. The amounts payable pursuant to this Section 6.11(a)(ii) shall
be paid as soon as reasonably practicable following the Effective Time.
(iii) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of the Substitute Options. Not later than 30 days after
the Effective Time, Parent shall file a registration statement on Form S-8 with
respect to the shares of Parent Common Stock subject to the Substitute Options
and shall use its best efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the related
prospectus) for so long as the Substitute Options remain outstanding.
(iv) All written materials provided to holders of outstanding
Company Stock Options describing the election rights prescribed by this Section
6.11(a) shall be subject to prior approval of Parent, which shall not be
unreasonably withheld.
(b) Employee Stock Purchase Plan. Prior to the Effective Time,
the Board of Directors (or, if appropriate, any committee thereof) shall cause
the Company Stock Purchase Plan and all rights thereunder to terminate, with the
effect of such termination being that no offering period and no purchase period
shall commence under such plan.
(c) Employee Benefits. Parent agrees that for a period of not
less than 12 months following the Effective Time, the employees of the Company
and its Subsidiaries in the United States (the "Employees") will be provided
with employee benefit plans and programs that are no less favorable in value in
the aggregate, as determined by Parent in good faith in accordance with any
reasonable method customarily used by Parent for making benefit comparisons, to
those provided to the Employees immediately prior to the Effective Time, as set
forth in Section 5.1(h)(ii) of the Company Disclosure Letter, excluding the
Stock Plans provided that nothing in this Agreement shall limit the right of
Parent or the Surviving Corporation to
-32-
<PAGE> 37
amend, terminate or discontinue any
particular employee benefit plan or program in accordance with the terms
thereof. Employees who become participants in any employee benefit plan or
program of the Parent or any of its Subsidiaries, excluding any program with
respect to retiree medical or retiree life insurance benefits, will be given
credit under such plans and programs, for purposes of eligibility and vesting
thereunder, for all service with the Company or its Subsidiaries.
Parent agrees that it shall, and shall cause the Surviving
Corporation to, honor all employment and severance agreements disclosed in
Section 6.11 of the Company Disclosure Letter (except to the extent such
employment and severance agreements are superseded as of the date hereof
pursuant to the Executive Agreements or are amended after the date hereof in
contravention of Section 6.1(d) of this Agreement) in accordance with the terms
thereof and subject to the rights of termination provided therein.
6.12. Fees and Expenses. Except as otherwise provided in this
Section 6.12 or in Section 8.2, whether or not the Merger shall be consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the fees and disbursements of
counsel, financial advisors, accountants, actuaries and consultants, shall be
paid by the party incurring such costs and expenses, provided that all expenses
incurred in connection with the filing fees for the Prospectus/Proxy Statement
and the Registration Statement on Form S-4 and the printing and mailing of the
Prospectus/Proxy Statement shall be shared equally by Parent and the Company.
6.13. Indemnification, Directors' and Officers' Insurance.
(a) Parent shall indemnify and hold harmless, to the fullest
extent permitted under applicable law (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable law provided the
Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification), each present and former director and officer of the Company
and its Subsidiaries (collectively, the "Indemnified Parties") against any costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement; provided, that Parent shall not
have any obligation hereunder to any Indemnified Party (i) if and when a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable law, or (ii) if such
matter is attributable to the gross negligence or willful misconduct of the
Indemnified Party. All rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(b) Any Indemnified Party wishing to claim indemnification
under Section 6.13(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent thereof, but the failure to so
notify shall not relieve Parent of any liability it may
-33-
<PAGE> 38
have to such Indemnified Party unless (and only to the extent) such failure
materially prejudices the indemnifying party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Parent or the Surviving Corporation shall have the right to
assume the defense thereof and Parent shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Parent or the Surviving Corporation elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between Parent or the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Parent
shall be obligated pursuant to this Section 6.13(b) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would create a conflict of interest, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) Parent shall not be liable for any settlement effected without its prior
written consent. If such indemnity is not available with respect to any
Indemnified Party, then the Surviving Corporation and the Indemnified Party
shall contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits.
(c) The Surviving Corporation shall use its best efforts to
maintain the Company's existing officers' and directors' liability insurance
("D&O Insurance") for a period of six years from and after the Effective Time;
provided, however, that the Surviving Corporation shall not be required to pay
an annual premium for D&O Insurance in excess of two times the last annual
premium paid by the Company prior to the date hereof, and that if the existing
D&O Insurance expires, is terminated or canceled during such six-year period,
the Surviving Corporation will use its best efforts to obtain as much
substantially similar D&O Insurance as can be obtained for the remainder of such
period but in no event for a premium in excess (on an annualized basis) of two
times such current premium.
(d) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section.
(e) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs, their representatives and assigns.
6.14. Takeover Statute. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated by this
Agreement, the Company Stockholder Agreement or the Company Option Agreement,
each of Parent and the Company and its Board of Directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement, the Company Stockholder Agreement and the Company Option Agreement or
by the
-34-
<PAGE> 39
Merger and otherwise act to eliminate or minimize the effects of such statute or
regulation on such transactions.
6.15. Parent Vote. Parent shall vote (or consent with respect
to) or cause to be voted (or a consent to be given with respect to) any Shares
and any shares of common stock of Merger Sub beneficially owned by it or any of
its Affiliates or with respect to which it or any of its Affiliates has the
power (by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement at any meeting
of shareholders of the Company or Merger Sub, respectively, at which this
Agreement shall be submitted for adoption and approval and at all adjournments
or postponements thereof (or, if applicable, by any action of shareholders of
either the Company or Merger Sub by consent in lieu of a meeting).
6.16. Notification of Certain Matters. Parent shall give
prompt notice to the Company, and the Company shall give prompt notice to
Parent, of (i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which would cause (A) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect or (B) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in any material respect; and (ii) any failure of Parent or the
Company, as the case may be, to comply with any covenant or agreement to be
complied with by it hereunder in any material respect; provided, however, that
the delivery of any notice pursuant to this Section 6.16 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.17. Real Estate Transfer and Gains Tax. Either the Company
or the Surviving Corporation shall pay all state or local Taxes, if any
(collectively, the "Gains Taxes"), attributable to the transfer of the
beneficial ownership of the Company's and its Subsidiaries' real properties, and
any penalties or interest with respect thereto, payable in connection with the
consummation of the Merger. The Company shall cooperate with Parent in the
filing of any returns with respect to the Gains Taxes, including supplying in a
timely manner a complete list of all real property interests held by the Company
and its Subsidiaries and any information with respect to such properties that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real properties of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion. The shareholders of the
Company shall be deemed to have agreed to be bound by the allocation established
pursuant to this Section 6.17 in the preparation of any return with respect to
the Gains Taxes.
6.18. Additional Product Liability Insurance. The Company
shall use its best efforts to obtain on or before the Closing Date, at a
reasonable cost to the Company (provided, that, such cost shall not exceed the
amount set forth in Section 6.18 of the Company Disclosure Letter), an admitted
policy of insurance issued by a licensed or non-admitted insurance company with
a Best rating of at least "A" providing coverage for product liability of $50
million, which would be excess to, and would follow the form of, the insurance
policies of the Company described in Section 6.18 of the Company Disclosure
Letter, provided, that prior to obtaining such policy, the Company shall give
notice to Parent of the cost thereof and the Company shall not obtain such
insurance policy if Parent determines that the Company should not do so. If the
-35-
<PAGE> 40
cost of such policy reflected in such notice is less than the amount set forth
in Section 6.18 of the Company Disclosure Letter and the Company does not obtain
such policy because of such determination by Parent, then Parent shall be deemed
to have waived the condition regarding obtaining such policy set forth in
Section 7.2(b) as a condition to the closing obligations of Parent and Merger
Sub.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of Shares constituting the Company Requisite Vote and shall
have been duly approved by the sole shareholder of Merger Sub in accordance with
applicable law and the articles of incorporation and by-laws of each such
corporation.
(b) NYSE Listing. The shares of Parent Common Stock
deliverable to the Company shareholders pursuant to this Agreement shall have
been authorized for listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity (collectively,
"Governmental Consents") in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby by the Company, Parent and Merger Sub shall have been made
or obtained (as the case may be), except those that the failure to make or to
obtain are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or a Parent Material Adverse Effect.
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order").
(e) S-4. The S-4 Registration Statement shall have become
effective under the Securities Act. No stop order suspending the effectiveness
of the S-4 Registration Statement
-36-
<PAGE> 41
shall have been issued, and no proceedings for that purpose shall have been
initiated or be threatened, by the SEC.
(f) Blue Sky Approval. Parent shall have received all state
securities and "blue sky" permits and approvals, if any, necessary to consummate
the transactions contemplated hereby.
7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement that
is qualified by materiality shall, to the extent qualified by materiality, have
been true and correct when made and shall be true and correct at and as of the
Closing Date as if made at and as of the Closing Date and each of such
representations and warranties that is not so qualified shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of the Closing Date as if made at and as of the
Closing Date, in each case except as contemplated or permitted by this Agreement
(and any failure of a representation or warranty to be true due to compliance
with Section 6.1(c), (f) or (k) will not result in the failure of this condition
to be satisfied); and Parent shall have received a certificate signed on behalf
of the Company by its Chief Executive Officer and its Chief Financial Officer to
such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date (including
obtaining the insurance policy contemplated by Section 6.18 for a cost not
exceeding the amount contemplated in Section 6.18) and Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(c) Consents Under Agreements. The Company shall have obtained
the consent or approval of each Person whose consent or approval shall be
required under any Debt Contract or Other Contract to which the Company or any
of its Subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
(d) Tax Opinion. Parent shall have received an opinion of
Sidley & Austin dated the Closing Date, in form and substance reasonably
satisfactory to Parent, substantially to the effect that, for federal income tax
purposes:
(i) The Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Company, Merger Sub
and Parent will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
(ii) No gain or loss will be recognized by Parent or
the Company as a result of the Merger.
-37-
<PAGE> 42
(iii) No gain or loss will be recognized by the
shareholders of the Company upon the exchange of their Shares solely for shares
of Parent Common Stock pursuant to the Merger, except with respect to cash, if
any, received in lieu of fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent
Common Stock received by a shareholder solely in exchange for Shares pursuant to
the Merger (including fractional shares of Parent Common Stock for which cash is
received) will be the same as the aggregate tax basis of the Shares exchanged
therefor.
(v) The holding period for shares of Parent Common
Stock received by a shareholder solely in exchange for Shares pursuant to the
Merger will include the holding period that such Shares were held by the
shareholder, provided such Shares were held as capital assets by such
shareholder at the Effective Time.
(vi) A shareholder of the Company who receives cash
in lieu of a fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in such
fractional share and the amount of cash received.
In rendering such opinion, Sidley & Austin may receive and
rely upon representations contained in a certificate of Parent (the "Parent Tax
Certificate") substantially in the form attached to the Parent Disclosure
Letter, a certificate of the Company (the "Company Tax Certificate")
substantially in the form attached to the Company Disclosure Letter and other
appropriate certificates of Parent, the Company and others.
7.3. Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent and Merger Sub contained in this
Agreement that is qualified by materiality shall, to the extent qualified by
materiality, have been true and correct when made and shall be true and correct
at and as of the Closing Date as if made at and as of the Closing Date and each
of such representations and warranties that is not so qualified shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of the Closing Date, in each case except as contemplated or permitted by this
Agreement; and the Company shall have received a certificate signed on behalf of
Parent by its Chief Executive Officer and its Chief Financial Officer.
(b) Performance of Obligations of Parent and Merger Sub. Each
of Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date and the Company shall have received a certificate signed on
behalf of Parent by its Chief Executive Officer and its Chief Financial Officer
to such effect.
-38-
<PAGE> 43
(c) Consents Under Agreements. Parent shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
Debt Contract or Other Contract to which Parent or any of its Subsidiaries is a
party, except those for which failure to obtain such consents and approvals,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(d) Tax Opinion. The Company shall have received an opinion of
Morgan, Lewis & Bockius LLP, dated the Closing Date, in form and substance
reasonably satisfactory to the Company, substantially to the effect that, for
federal income tax purposes:
(i) The Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Company, Merger Sub
and Parent will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
(ii) No gain or loss will be recognized by Parent or
the Company as a result of the Merger.
(iii) No gain or loss will be recognized by the
shareholders of the Company upon the exchange of their Shares solely for shares
of Parent Common Stock pursuant to the Merger, except with respect to cash, if
any, received in lieu of fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent
Common Stock received by a shareholder solely in exchange for Shares pursuant to
the Merger (including fractional shares of Parent Common Stock for which cash is
received) will be the same as the aggregate tax basis of the Shares exchanged
therefor.
(v) The holding period for shares of Parent Common
Stock received by a shareholder solely in exchange for Shares pursuant to the
Merger will include the holding period that such Shares were held by the
stockholder, provided such Shares were held as capital assets by such
shareholders at the Effective Time.
(vi) A shareholder of the Company who receives cash
in lieu of a fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in such
fractional share and the amount of cash received.
In rendering such opinion, Morgan, Lewis & Bockius LLP may
receive and rely upon representations contained in a certificate of Parent
substantially in the form of the Parent Tax Certificate, a certificate of the
Company substantially in the form of the Company Tax Certificate and other
appropriate certificates of Parent, the Company and others.
-39-
<PAGE> 44
ARTICLE VIII
TERMINATION
8.1. Termination. This Agreement may be terminated, and the
Merger abandoned, at any time prior to the Effective Time, whether before or
after any approval by the shareholders of Merger Sub or the Company of the
matters presented in connection with the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, by written notice to the Company, if (i) the
Company shall have failed to comply in any material respect with any of its
covenants or agreements contained in this Agreement required to be complied with
prior to the date of such termination, which failure to comply has not been
cured within 20 business days after receipt by the Company of written notice of
such failure to comply or (ii) the shareholders of the Company shall not approve
the Merger at the Shareholders Meeting or any adjournment thereof,
(c) by the Company, by written notice to Parent, if (i) Parent
or Merger Sub shall have failed to comply in any material respect with any of
its respective covenants or agreements contained in this Agreement required to
be complied with prior to the date of such termination, which failure to comply
has not been cured within 20 business days after receipt by Parent of written
notice of such failure to comply or (ii) the shareholders of the Company shall
not approve the Merger at the Shareholders Meeting or any adjournment thereof,
(d) by either Parent or the Company, by written notice from
the terminating party to the other parties, if there has been (i) a breach by
the other (or Merger Sub if the Company is the terminating party) of any
representation or warranty made as of the date hereof that is not qualified by
reference to a Material Adverse Effect, the effect of which has a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the case may be,
or (ii) a breach by the other (or Merger Sub if the Company is the terminating
party) of any representation or warranty made as of the date hereof that is
qualified by reference to a Material Adverse Effect, in each case, which breach
has not been cured (if capable of being cured) within 20 business days after
receipt by the breaching party of written notice of the breach; provided that
any breach of a representation or warranty of the Company due to compliance with
Section 6.1(c), (f) or (k) shall not be grounds for termination of this
Agreement by Parent pursuant to this Section 8.1(d);
(e) by either Parent or the Company, by written notice from
the terminating party to the other parties if (i) the Merger has not been
effected on or prior to the close of business on May 31, 2000, whether such date
is before or after the date of approval by the shareholders of the Company;
provided, however, that the right to terminate this Agreement pursuant to this
clause (e) shall not be available to any party whose failure to fulfill any
obligation of this Agreement has been the cause of, or resulted in, the failure
of the Merger to have occurred on or prior to such date; or (ii) any court or
other Governmental Entity having
-40-
<PAGE> 45
jurisdiction over a party hereto shall have issued an injunction, order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable;
(f) by the Company, by written notice to Parent, if the Board
of Directors of the Company shall determine in good faith that a Takeover
Proposal constitutes a Superior Proposal; provided, however, that the Company
may not terminate this Agreement pursuant to this clause (f) unless (i) five
business days shall have elapsed after delivery to Parent of a written notice of
such determination by such Board of Directors and at all reasonable times during
such five business day period the Company shall have provided Parent a
reasonable opportunity, during such five business day period, to propose a
modification of the terms and conditions of this Agreement so that a business
combination between the Company and Parent (or an Affiliate of Parent) may be
effected, and (ii) at the end of such five business day period such Board of
Directors shall continue to believe in good faith, after receipt of advice from
its outside counsel, that such Takeover Proposal constitutes a Superior Proposal
and the failure to terminate this Agreement and enter into a definitive
acquisition, merger or similar agreement to effect such Superior Proposal would
be inconsistent with the fiduciary obligations of such Board of Directors under
applicable law; and (iii) simultaneously therewith the Company shall enter into
a definitive acquisition, merger or similar agreement to effect such Superior
Proposal;
(g) by Parent, by written notice to the Company, if (i) the
Board of Directors of the Company shall not have recommended the Merger to the
Company's shareholders, or shall have resolved not to make such recommendation,
or shall have modified in a manner adverse to Parent or rescinded its
recommendation of the Merger to the Company's shareholders as being advisable
and fair to and in the best interests of the Company and its shareholders, or
shall have modified in a manner adverse to Parent or rescinded its approval of
the Agreement, or shall have resolved to do any of the foregoing, (ii) the Board
of Directors of the Company shall have recommended to the shareholders of the
Company any Takeover Proposal (other than by Parent or an Affiliate of Parent)
or shall have resolved to do so, (iii) any Person (other than Parent or an
Affiliate of Parent) acquires Beneficial Ownership (as defined in the Company
Option Agreement) of 15% or more of the outstanding shares of capital stock of
the Company, (iv) a tender offer or exchange offer (other than by Parent or an
Affiliate of Parent) for 15% or more of the outstanding shares of capital stock
of the Company is commenced, and the Board of Directors of the Company fails to
recommend against acceptance of such tender offer or exchange offer by its
shareholders within the ten business day period (or such shorter period)
required by Section 14e-2 of the Exchange Act (the taking of no position by the
expiration of such ten business day period (or such shorter period) with respect
to the acceptance of such tender offer or exchange offer by its shareholders
constituting such a failure), or (v) the Company or any of its Subsidiaries,
without having received prior written consent from Parent, shall have entered
into, authorized, recommended, proposed, or publicly announced its intention to
enter into, authorize, recommend or propose to its shareholders an agreement,
arrangement, understanding or letter of intent with any Person (other than
Parent or any of its Affiliates) to (A) effect a merger or consolidation or
similar transaction involving the Company or any of its Significant
Subsidiaries, (B) purchase, lease, or otherwise acquire all or a substantial
portion of the assets of the Company or any of its Subsidiaries comprising 15%
or more of the assets of the Company and its
-41-
<PAGE> 46
Subsidiaries, taken as a whole, or (C) purchase or otherwise acquire (including
by way of merger, consolidation, share exchange or similar transaction)
Beneficial Ownership (as defined in the Company Option Agreement) of securities
representing 15% or more of the voting power of the Company (in each case other
than any such merger, consolidation, purchase, lease or other transaction
involving only the Company and one or more of its Subsidiaries or involving only
any two or more of its Subsidiaries); and
(h) by Parent or the Company, by written notice to the other
party, if ten business days elapse after all the conditions set forth in Article
VII (other than conditions that by their nature are to be satisfied at the
Closing) shall be satisfied or waived and the Closing shall not have occurred
through no fault of the terminating party.
The right of Parent or the Company to terminate this Agreement
pursuant to this Section 8.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of such party, whether
prior to or after the execution of this Agreement.
8.2. Effect of Termination. (a) In the event of the
termination of this Agreement by either Parent or the Company as provided in
Section 8.1, this Agreement shall forthwith become void without any liability
hereunder on the part of the Company, Parent, Merger Sub or their respective
directors or officers, except that the agreements of the Company, Parent and
Merger Sub contained in Section 6.12 (Expenses) and this Section 8.2, in Article
IX and in the Confidentiality Agreements dated July 16, 1999 and October 12,
1999 between Parent and the Company (the "Confidentiality Agreements") shall
survive any such termination; provided, however, that nothing contained in this
Section 8.2 shall relieve any party hereto from any liability for any breach of
this Agreement.
(b) If:
(i) a Purchase Event (as defined in the Company
Option Agreement) shall have occurred,
(ii) the shareholders of the Company fail to approve
the Merger at the Shareholders Meeting or any adjournment thereof and,
immediately prior to such vote, there exists (x) a Takeover Proposal
(other than by Parent or any Affiliate of Parent) or (y) an outstanding
tender offer or exchange offer by any person (other than Parent or any
Affiliate of Parent) for 15% or more of the outstanding shares of
capital stock of the Company (any transaction described in the
preceding clauses (x) or (y) being a "Third Party Transaction"), and
the Company or its Affiliates consummates such Third Party Transaction
within one year of the date of the Shareholders Meeting or any
adjournment thereof (the "Meeting Date"), or
(iii) Parent terminates this Agreement pursuant to
Section 8.1(b)(i) and at the time of such termination there exists a
Third Party Transaction, and the Company or its Affiliates consummates
such Third Party Transaction within one year of such termination,
-42-
<PAGE> 47
then in the case of any event described in the preceding clauses (i), (ii) or
(iii) the Company shall pay to Parent an amount in cash equal to the Termination
Fee (as defined below). If (A) the shareholders of the Company fail to approve
the Merger at the Shareholders Meeting or any adjournment thereof and,
immediately prior to such vote, there exists a Third Party Transaction, or (B)
Parent terminates this Agreement pursuant to Section 8.1(b)(i) and at the time
of such termination there exists a Third Party Transaction, then within five
business days of the Meeting Date or the date of such termination, as the case
may be, the Company shall pay to Parent all of Parent's and Merger Sub's
expenses incurred in connection herewith (the "Merger Expenses") up to a maximum
amount of $1,000,000 (the "Expense Cap"). If the Company subsequently pays the
Termination Fee pursuant to clause (ii) or (iii) of this Section 8.2(b), such
amount shall be offset and reduced by the amount of the Merger Expenses actually
paid to Parent by the Company under this Section 8.2(b).
(c) If (i) the Company's shareholders do not approve the
Merger at the Shareholders Meeting or any adjournment thereof or (ii) Parent
terminates this Agreement pursuant to Section 8.1(b)(i) or 8.1(d), and,
immediately prior to such vote or such termination, there exists no Third Party
Transaction, then within five business days of the Meeting Date or the date of
such termination, as the case may be, the Company shall pay to Parent an amount
in cash equal to the Merger Expenses up to the Expense Cap.
(d) Any payment of the Termination Fee (i) made pursuant to
clause (i) of Section 8.2(b) shall be made within five business days of the
occurrence of the events described therein or (ii) made pursuant to clause (ii)
or (iii) of Section 8.2(b) shall be made on the date of consummation of the
Third Party Transaction, in each case by wire transfer of immediately available
funds to an account designated in writing by Parent.
(e) As used in this Agreement, the term Termination Fee means
$15,000,000 (subject to the provisions of the Company Option Agreement).
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of the
Company, Parent and Merger Sub contained in Article IV and in Sections 6.6
(Taxation), 6.9 (Stock Exchange Listing and Delisting), 6.11 (Options and
Benefits), 6.12 (Fees and Expenses) and 6.13 (Indemnification; Directors' and
Officers' Insurance) shall survive the consummation of the Merger. This Article
IX, the agreements of the Company, Parent and Merger Sub contained in Section
6.12 (Expenses), Section 8.2 (Effect of Termination and Abandonment) and the
Confidentiality Agreements shall survive the termination of this Agreement. All
other representations, warranties, covenants and agreements in this Agreement
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. Modification or Amendment. Subject to the provisions of
the applicable law and the rules of the NYSE, at any time prior to the Effective
Time, the parties hereto may modify
-43-
<PAGE> 48
or amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
9.4. Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
9.5. GOVERNING LAW AND VENUE, WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF,
EXCEPT THAT MATTERS RELATING TO THE INTERNAL CORPORATE LAW OF THE COMPANY SHALL
BE GOVERNED BY THE FBCA. Except as permitted by Section 9.13, the parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Delaware
and the Federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware State or Federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
-44-
<PAGE> 49
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by overnight courier or by registered or
certified mail, postage prepaid, or by facsimile:
if to Parent or Merger Sub:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Attention: Senior Vice President - Law and Government Affairs
Facsimile: 972-281-1578
with a copy to:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile: (312) 853-7036
if to the Company:
Safeskin Corporation
12671 High Bluff Drive
San Diego, California 92130
Attention: General Counsel
Facsimile: 858-350-6974
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Howard L. Shecter
Facsimile: (212) 309-7044
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
-45-
<PAGE> 50
9.7. Entire Agreement, No Other Representations. This
Agreement (including any exhibits hereto), the Company Option Agreement, the
Company Disclosure Letter, the Parent Disclosure Letter, the Company Stockholder
Agreements, the Executive Agreements and the Confidentiality Agreements
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR
WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES
MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL
AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in
Section 6.13 (Indemnification; Directors' and Officers' Insurance), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to constitute an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to constitute
an undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this Agreement
-46-
<PAGE> 51
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
9.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Parent may designate, by
written notice to the Company, another wholly-owned direct Subsidiary to be a
Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other Subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other Subsidiary as of the date of such designation.
9.13. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the terms or provisions
of this Agreement were not performed in accordance with their specific wording
or were otherwise breached. It is accordingly agreed that each of the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States of America or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party may be entitled
at law or in equity.
9.14. Projections and Forward-Looking Information. Certain
statements (i) contained in the Company Reports or in materials made available
by the Company to Parent or in statements made by the Company to Parent in
connection with the transactions contemplated by this Agreement or (ii)
contained in the Parent Reports or in materials made available by Parent to the
Company or in statements made by Parent to the Company in connection with the
transactions contemplated by this Agreement may contain projections or other
forward-looking information which indicate the Company's or the Parent's (as the
case may be) current expectations or forecasts of future events. Such statements
may often be identified by terms such as "anticipate," "believe," "estimate,"
"expect," "intend," "may," "could," "possible," "plan," "project," "will,"
"forecast" and similar words or expressions. Such forward-looking information
inherently involves a variety of risks and uncertainties, known and unknown, and
may be affected by inaccurate assumptions and numerous other factors, including
risks not identified in any discussion of risk factors contained in the Company
Reports or the Parent Reports. Actual results may vary materially. With respect
to all such projections and other forward-looking information and data, it is
acknowledged and agreed by the parties that none of the parties hereto is making
any representation or warranty with respect to the fulfillment of any such
projection or forward- looking information and data.
-47-
<PAGE> 52
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
SAFESKIN CORPORATION
By: /s/ RICHARD JAFFE
Name: Richard Jaffe
Title: Chairman
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Group President -
Globalhealthcare/non wovens
BROOKS ACQUISITION CORP.
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Vice President
-48-
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
COMPANY OPTION AGREEMENT
This COMPANY OPTION AGREEMENT ("Option Agreement") dated as of
November 17, 1999, is by and between Kimberly-Clark Corporation, a Delaware
corporation ("Parent"), and Safeskin Corporation, a Florida corporation
("Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent and
Company have approved an Agreement and Plan of Merger dated as of even date
herewith (the "Merger Agreement") providing for the merger of a wholly-owned
subsidiary of Parent ("Merger Sub") with and into Company with Company being the
Surviving Corporation;
WHEREAS, as a condition to Parent's willingness to enter into
the Merger Agreement, Company has agreed to grant to Parent the option set forth
herein to purchase 7,492,353 shares of the Common Stock, par value $.01 per
share, of Company (the "Common Stock") as provided herein; and
WHEREAS, contemporaneously herewith, Parent, Sub and Company
are entering into the Merger Agreement.
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined herein shall have the
same meanings as set forth in the Merger Agreement.
2. GRANT OF OPTION.
On the terms and subject to the conditions set forth herein,
Company hereby grants to Parent an irrevocable option (the "Option") to purchase
up to 7,492,353 authorized but previously unissued shares of Common Stock at a
price of $12.00 per share (the "Purchase Price") payable in cash as provided in
Section 4 hereof.
3. EXERCISE OF OPTION.
(a) Parent may exercise the Option in its entirety at any time
after a Purchase Event (as defined below) shall have occurred; provided,
however, that (i) if the Option shall not have been exercised, it shall
terminate and be of no further force and effect upon the earlier to occur of (A)
the Effective Time of the Merger, or (B) the termination of the Merger Agreement
<PAGE> 2
in accordance with its terms; provided, further, however, that (x) if the Merger
Agreement is terminated by Company pursuant to Section 8.1(f) thereof, or (y)
the Merger Agreement is terminated by Parent or Parent has the right to
terminate the Merger Agreement pursuant to Section 8.1(g) thereof, the Option
shall remain exercisable until the date which is 90 days after the date of such
termination (or, if earlier, 90 days after the date on which Parent has the
right to terminate the Merger Agreement under Section 8.1(g)); and provided,
further, that, if prior to the termination of the Merger Agreement in accordance
with its terms, a Takeover Proposal by any Person (other than Parent or an
Affiliate of Parent) shall have been publicly announced, the Option shall not
terminate until the earlier of (x) the date a Purchase Event can no longer occur
and (y) 90 days after the occurrence of a Purchase Event, except that if the
Purchase Event is of the type described in clause (ii) of the definition
thereof, the Option shall not terminate until 90 days after the termination of
the Merger Agreement; (ii) if the Option cannot be exercised immediately prior
to its expiration date because of an injunction, order or similar restraint
issued by a court of competent jurisdiction, the Option shall expire on the 30th
business day after such injunction, order or restraint shall have been dissolved
or when such injunction, order or restraint shall have become permanent and no
longer subject to appeal, as the case may be; and (iii) if the Option cannot be
exercised immediately prior to its expiration date because any applicable
waiting periods under the Hart-Scott Rodino Antitrust Improvements Act of 1976
or similar laws of applicable foreign countries (collectively, the "Antitrust
Laws") shall not have expired or been terminated, the Option shall expire on the
30th business day after such expiration or termination.
(b) As used herein, a "Purchase Event" shall be deemed to have
occurred if:
(i) the Merger Agreement is terminated by Company in
accordance with Section 8.1(f) thereof;
(ii) Parent has the right to terminate the Merger
Agreement pursuant to Section 8.1(g) thereof; or
(iii) all of the following occur: (A) prior to the
Shareholders Meeting the Merger Agreement shall not have been
terminated and there shall have been publicly announced a
Takeover Proposal by any Person (other than Parent or an
Affiliate of Parent), (B) after such public announcement the
shareholders of Company shall not approve the Merger at the
Shareholders Meeting or any adjournment thereof, (C) within
twelve months after the Shareholders Meeting or the last
adjournment thereof Company shall enter into any written
letter of intent (whether or not binding), acquisition
agreement, merger agreement or other similar agreement or
agreement in principle in respect of a Takeover Proposal with
any Person contemplated by clause (A) above or such Person
shall commence any tender or exchange offer for the Shares,
and (D) upon, or at any
-2-
<PAGE> 3
time within twelve months after, such entry into any letter of
intent or agreement or such commencement of any tender or
exchange offer such Person shall consummate a transaction
similar to that contemplated by such Takeover Proposal or any
tender or exchange offer for Beneficial Ownership of at least
15% of the Shares.
(c) If Parent wishes to exercise the Option, it shall deliver
to Company a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares it intends to purchase
pursuant to such exercise and (ii) a place and date nor earlier than three
business days nor later than 10 business days (or, if approval under the HSR Act
is required, 60 calendar days) from the Notice Date for the closing of such
purchase (the "Closing Date").
(d) Parent may, in its sole discretion, terminate the Option
prior to the termination date contemplated by Section 3(a) hereof by giving
notice to Company to such effect.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At any closing referred to in Section 3 hereof, Parent
shall pay to Company the aggregate Purchase Price for the shares of Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated in writing by Company.
(b) At any such closing, simultaneously with the delivery of
cash as provided in Section 4(a), Company shall deliver to Parent a certificate
or certificates representing the number of shares of Common Stock purchased by
Parent, registered in the name of Parent or a nominee designated in writing by
Parent, and Parent shall deliver to Company a letter agreeing that Parent shall
not offer to sell, pledge or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) If at the time of issuance of any Common Stock pursuant to
any exercise of the Option, Company shall have issued any share purchase rights
or similar securities to holders of Common Stock, including, without limitation,
the Company Rights, then each such share of Common Stock shall also represent
rights with terms substantially the same as and at least as favorable to Parent
as those issued to other holders of Common Stock.
(d) Certificates for Common Stock delivered at any closing
hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an agreement
between the registered holder hereof and Kimberly-Clark
Corporation, a copy of which is on file at the principal
office of Kimberly-Clark Corporation, and to resale
restrictions arising under the Securities
-3-
<PAGE> 4
Act of 1933 and any applicable state securities laws. A copy
of such agreement will be provided to the holder hereof
without charge upon receipt by Kimberly- Clark Corporation of
a written request therefor."
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such legend if Parent
shall have delivered to Company an opinion of counsel reasonably acceptable to
Company, in form and substance reasonably satisfactory to Company and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and any applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) Company hereby represents and warrants to Parent that:
(i) Company has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by the Board of Directors of Company, and no
other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered and represents a valid and legally
binding obligation of Company, enforceable against Company in
accordance with its terms, except that enforceability may be
limited by the Bankruptcy Exception and is subject to the
Equity Exception;
(iv) Company has taken all necessary corporate action
to authorize and reserve and permit it to issue and, at all
times from the date hereof through the date of the exercise in
full or the expiration or termination of the Option, shall
have reserved for issuance upon exercise of the Option,
7,492,353 shares of Common Stock (as such number may be
adjusted pursuant to Section 6 hereof), all of which, upon
issuance pursuant hereto, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered
free and clear of all claims, liens, encumbrances,
restrictions, security interests and preemptive rights; and
(v) except as otherwise required by the Antitrust
Laws and other than any filings required under applicable
securities and blue sky laws, the execution and delivery of
this Option Agreement by Company and the consummation by it of
the transactions contemplated hereby do not require the
consent, waiver, approval or authorization of or any filing
with any person or public authority and will not violate,
result in a breach of or the acceleration of any obligation
under, or
-4-
<PAGE> 5
constitute a default under, any provision of any charter or
bylaws, indenture, mortgage, lien, lease, agreement, contract,
instrument, order, law, rule, regulation, judgment, ordinance,
or decree, or restriction by which Company or any of its
Subsidiaries or any of their respective properties or assets
is bound.
(b) Parent hereby represents and warrants to Company that:
(i) Parent has full corporate authority to execute
and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by all requisite corporate action by Parent,
and no other corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered and represents a valid and legally
binding obligation of Parent, enforceable against Parent in
accordance with its terms, except that enforcement may be
limited by the Bankruptcy Exception and is subject to the
Equity Exception;
(iv) any Common Stock or other securities acquired by
Parent upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be
transferred or otherwise disposed of except in compliance with
the Securities Act; and
(v) except as otherwise required by the Antitrust
Laws and other than any filings required under applicable
securities and blue sky laws, the execution and delivery of
this Option Agreement by Parent and the consummation by it of
the transaction contemplated hereby do not require the
consent, waiver, approval or authorization of or any filing
with any person or public authority and will not violate,
result in a breach of or the acceleration of any obligation
under, or constitute a default under, any provision of any
charter or by-law, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation,
judgment, ordinance, or decree, or restriction by which Parent
or any of its Subsidiaries or any of their respective
properties or assets is bound.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Common Stock by reason of stock
dividends, stock splits, split-ups, reclassifications, recapitalizations or the
like, the type and number of shares subject to the Option, and the purchase
price per share, as the case may be, shall be adjusted appropriately. If any
additional shares of Common Stock are issued or sold by the Company after the
date hereof (other than pursuant to an event described in the preceding sentence
or pursuant
-5-
<PAGE> 6
to this Option Agreement), the number of shares of Common Stock subject to the
Option (but not the purchase price per share) shall be adjusted so that, after
such issuance, it equals at least 14.0% of the number of shares of Common Stock
then issued and outstanding (without considering as outstanding any shares
subject to or issued pursuant to the Option).
7. REPURCHASE.
(a) At the request of Parent at any time after the occurrence
of a Purchase Event but prior to the second anniversary of such Purchase Event
(the "Repurchase Period"), if a Put Event (as defined below) has occurred,
Company (or any successor entity thereof) shall repurchase the Option from
Parent together with all (but not less than all, subject to Section 10) shares
of Common Stock subject thereto or purchased by Parent pursuant thereto and with
respect to which Parent then has Beneficial Ownership, at a price per share (the
"Per Share Repurchase Price") equal to the greater of:
(i) The per share exercise price paid by Parent for
any shares of Common Stock acquired pursuant to the Option;
(ii) The "Market Price" per share of Common Stock
(defined as the average of the closing sales price per share
for the 10 trading days prior to the date of such request for
Common Stock on the NASDAQ (as reported in the Wall Street
Journal or other authoritative source)); and
(iii) The highest price per share paid in any
transaction triggering a Put Event pursuant to Section 7(c)
hereof or at which a tender or exchange offer which led to a
Put Event was made for shares of Common Stock. In determining
such price, the value of any consideration other than cash
shall be determined by an independent nationally recognized
investment banking firm selected by Parent and reasonably
acceptable to Company.
(b) If Parent exercises its rights under this Section 7,
Company shall, within 10 business days thereafter, pay the required amount to
Parent by wire transfer of immediately available funds to an account designated
by Parent and Parent shall surrender to Company the Option and the certificates
evidencing any shares of Common Stock purchased thereunder with respect to which
Parent then has Beneficial Ownership, and Parent shall warrant that it has sole
record and Beneficial Ownership of such shares and that the same are free and
clear of all liens, claims, charges, restrictions and encumbrances of any kind
whatsoever.
(c) For purposes of this Section 7, a "Put Event" shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or any similar transaction involving Company or any purchase, lease or other
acquisition of all or substantially all of the
-6-
<PAGE> 7
assets of Company and its Subsidiaries considered as a whole or (ii) upon the
acquisition by any person of Beneficial Ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event shall constitute
a Put Event unless a Purchase Event shall have occurred prior to expiration or
termination of the Option.
8. REPURCHASE AT OPTION OF COMPANY AND FIRST REFUSAL.
(a) Except to the extent that Parent shall have previously
exercised its rights under Section 7, at the request of Company from and after
the date which is the later of (x) six months after a Purchase Event has
occurred and (y) 180 days after the date of termination of the Merger Agreement,
Company may repurchase from Parent, and Parent shall sell to Company, the Option
together with all (but not less than all, subject to Section 10) shares of
Common Stock subject thereto or purchased by Parent pursuant hereto and with
respect to which Parent then has Beneficial Ownership at a price per share equal
to the greater of (i) the Market Price per share of Common Stock (less the
exercise price per share for any unexercised shares of Common Stock subject to
the Option) and (ii) the per share exercise price paid by Parent for any shares
of Common Stock acquired pursuant to the Option (less the exercise price per
share for any unexercised shares of Common Stock subject to the Option).
(b) If Company exercises its rights under Section 8(a),
Company shall, within 10 business days thereafter, pay the required amount to
Parent by wire transfer of immediately available funds to an account designated
by Parent and Parent shall surrender to Company the Option and the certificates
evidencing any shares of Common Stock purchased thereunder with respect to which
Parent then has Beneficial Ownership, and Parent shall warrant that it has sole
record and Beneficial Ownership of such shares and that the same are free and
clear of all liens, claims, charges, restrictions and encumbrances of any kind
whatsoever.
(c) If, at any time after the occurrence of a Purchase Event
and prior to the second anniversary of the date of such occurrence, Parent shall
desire to sell, assign, transfer or otherwise dispose of the Option or all or
any of the shares of Common Stock acquired by it pursuant to the Option, it
shall give Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, and setting forth the terms of
the proposed transaction. An Offeror's Notice shall be deemed an offer by Parent
to Company, which may be accepted within 10 business days after its receipt of
such Offeror's Notice, to purchase such Option or shares on the same terms and
conditions and at the same price at which Parent is proposing to transfer the
Option or such shares to a third party. The purchase of the Option or such
shares by Company shall be closed within 10 business days of the date of the
acceptance of the offer and the purchase price shall be paid to Parent by wire
transfer of immediately available funds to an account designated by Parent. In
the event of the failure or refusal of Company to purchase the Option or shares
in each case as and to the extent covered by the Offeror's Notice or if the
Board of Directors of Company does not approve Company's proposed purchase of
the Option or such shares, Parent may, within 60 days from the date of the
-7-
<PAGE> 8
Offeror's Notice, sell all, but not less than all, of the Option or such shares
in each case as and to the extent covered by the Offeror's Notice to such third
party at no less than the price specified and on terms no more favorable to the
purchaser than those set forth in the Offeror's Notice. These requirements shall
not apply to any disposition of Common Stock by a Person to whom Parent has sold
shares of Common Stock issued upon exercise of the Option in compliance with the
terms hereof.
(d) As used herein, the terms "Beneficial Ownership" and
"Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3 under
the Exchange Act.
9. REGISTRATION RIGHTS; APPROVAL.
(a) For three years after a Purchase Event, Company shall, if
requested by any holder or beneficial owner (each a "Holder") of more than
2,000,000 shares (subject to adjustment in the event of any stock dividend,
stock split, split-up, reclassification, recapitalization or the like) of Common
Stock issued pursuant to this Option Agreement, file a registration statement on
a form for general use under the Securities Act if necessary in order to permit
the sale or other disposition of the shares of Common Stock that have been
acquired upon exercise of the Option in accordance with the intended method of
sale or other disposition requested by such Holder (it being understood and
agreed that any such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall Beneficially Own more than 2% of the shares of Common Stock then
outstanding). Each such Holder shall provide all information reasonably
requested by Company for inclusion in any registration statement to be filed
hereunder. Company shall use its reasonable commercial efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 90 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The registration effected under this Section 9
shall be at Company's expense except for underwriting commissions and the fees
and disbursements of such Holder's counsel attributable to the registration of
such Common Stock. In no event shall Company be required to effect more than one
registration hereunder. The filing of the registration statement hereunder may
be delayed once for up to 120 days if such filing would require premature
disclosure of any material corporate development or otherwise interfere with or
adversely affect any proposed distribution by Company of Common Stock or if a
special audit of Company would otherwise be required in connection therewith. If
requested by any such Holder in connection with such registration, Company shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of the
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for parties similarly situated. Upon
receiving any request for registration under this Section 9 from any Holder
entitled to such registration, Company agrees to send a copy thereof to
-8-
<PAGE> 9
any other person known to Company to be entitled to registration rights under
this Section 9, in each case by promptly mailing the same, postage prepaid, to
the address of record of the person entitled to receive such copies entitled to
such registration.
(b) Subject to applicable law and the rules and regulations of
the Nasdaq Stock Market, Company shall promptly file an applicable to list the
shares subject to the Option on the Nasdaq Stock Market and will use its
commercially reasonable efforts to obtain approval of such listing and to effect
all necessary filings by Company under the HSR in connection with the
transactions contemplated hereby. Each of the parties hereto will use its
commercially reasonable efforts to obtain consents of all third parties and
governmental authorities, if any, necessary for the consummation of the
transactions contemplated.
10. SEVERABILITY.
Any term, provision, covenant or restriction contained in this
Option Agreement held by a court of competent jurisdiction to be invalid, void
or unenforceable shall be ineffective to the extent of such invalidity, voidness
or unenforceability, but neither the remaining terms, provisions, covenants or
restrictions contained in this Option Agreement nor the validity or
enforceability thereof in any other jurisdiction shall be affected or impaired
thereby. Any term, provision, covenant or restriction contained in this Option
Agreement that is so found to be so broad as to be unenforceable shall be
interpreted to be as broad as is enforceable. If for any reason such court
determines that applicable law will not permit Parent or any other person to
acquire, or Company to repurchase or purchase, the full number of shares of
Common Stock provided in Section 2 hereof (as adjusted pursuant to Section 6
hereof), it is the express intention of the parties hereto to allow Parent or
such other person to acquire, or Company to repurchase or purchase, such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
11. PROFIT LIMITATION.
(a) Notwithstanding any other provision of this Option
Agreement or the Merger Agreement, in no event shall Parent's Total Profit (as
hereinafter defined) exceed $25,000,000 and, if it otherwise would exceed such
amount, Parent shall repay such excess amount to Company in cash (or the
purchase price for purposes of Section 7 or 8, as applicable, shall be reduced)
so that Parent's Total Profit shall not exceed $25,000,000 after taking into
account the foregoing actions.
Notwithstanding any other provision of this Option Agreement,
the Option may not be exercised for a number of Option Shares as would, as of
the Notice Date, result in a Notional Total Profit (as defined below) of more
than $10,000,000 and, if exercise of the Option otherwise would exceed such
amount, Parent, at its discretion, may increase the Purchase Price for that
number of Option Shares set forth in the notice delivered on such Notice Date so
that the Notional Total Profit shall not exceed $10,000,000; provided, however,
that nothing in this
-9-
<PAGE> 10
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date at the Purchase Price set forth in Section 2 hereof.
As used herein, the term "Total Profit" means the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Parent pursuant to Section 8.2(b) of the Merger Agreement; less any repayment of
such cash to Company, (ii) the amount received by Parent pursuant to Company's
repurchase of the Option or Option Shares pursuant to Section 7 or 8 hereof,
less Parent's purchase price therefor, and (iii) the net cash amounts received
by Parent pursuant to the sale of Option Shares (or any other securities into or
for which such Option Shares are converted or exchanged) to any unaffiliated
party, less Parent's purchase price therefor.
As used herein, the term "Notional Total Profit" with respect
to any number of Option Shares as to which Parent may propose to exercise the
Option shall be the Total Profit determined as of the Notice Date assuming that
the Option was exercised on such date for such number of Option Shares and
assuming that such Option Shares, together with all Option Shares acquired upon
exercise of the Option and held by Parent and its affiliates as of such date,
were sold for cash at the closing market price for the Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
12. MISCELLANEOUS.
(a) Expenses. Each of the parties hereto shall pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, except as otherwise
provided herein.
(b) Entire Agreement. Except as otherwise expressly provided
herein or therein, this Option Agreement and the Merger Agreement contain the
entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements and understandings
with respect hereto, written or oral.
(c) Successors; No Third Party Beneficiaries. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto and any Holder, and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Option Agreement, except as expressly
provided herein.
(d) Assignment. Other than as provided in Sections 8 and 9
hereof, neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other person (whether by
-10-
<PAGE> 11
operation of law or otherwise), without the express written consent of the other
party. Any purported assignment in violation hereof shall be null and void.
(e) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
in accordance with Section 9.6 of the Merger Agreement (which is incorporated
herein by reference).
(f) Counterparts. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(g) Specific Performance. The parties hereto agree that if for
any reason Parent or Company shall have failed to perform its obligations under
this Option Agreement, then either party hereto seeking to enforce this Option
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
(h) Governing Law. THIS OPTION AGREEMENT SHALL BE DEEMED TO BE
MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND
IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT THAT MATTERS RELATING TO THE INTERNAL
CORPORATE LAW OF THE COMPANY SHALL BE GOVERNED BY THE FBCA. Except as permitted
by Section 12(g), the parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of interpretation
and enforcement of the provisions of this Option Agreement and of the documents
referred to in this Option Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding of the interpretation or enforcement hereof or of
any such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Option Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 12(e) or in such other manner as
may be permitted by law shall be valid and sufficient service thereof.
-11-
<PAGE> 12
(i) Waiver of Jury. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS OPTION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS OPTION AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
OPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS OPTION AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12(i).
(j) Waiver and Amendment. Any provision of this Option
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(k) Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
-12-
<PAGE> 13
IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the date first written above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Group President -
Globalhealthcare/non wovens
SAFESKIN CORPORATION
By: /s/ RICHARD JAFFE
Name: Richard Jaffe
Title: Chairman
-13-
<PAGE> 1
EXHIBIT 99.1
Craig Price
Director - Corporate Communications
Kimberly-Clark Corporation
(972) 281-1481
Mark Francois
Director, Investor Relations
Safeskin Corporation
(619) 350-6840
KIMBERLY-CLARK TO ACQUIRE SAFESKIN
IN TAX-FREE TRANSACTION
Addition of Safeskin's Disposable Glove Business Gives Kimberly-Clark Complete
Line of Disposable Protective Apparel in Professional Health Care
DALLAS and SAN DIEGO, November 17, 1999 - Kimberly-Clark Corporation (NYSE: KMB)
and Safeskin Corporation (NASDAQ: SFSK) today announced the signing of a
definitive agreement for Kimberly-Clark to acquire Safeskin, a leading maker of
high-quality, disposable gloves for the health care, high-technology and
scientific industries.
The acquisition will provide Kimberly-Clark's professional health care
business with new product offerings that will allow it to continue expanding
into new segments and markets, while leveraging its existing products and
technologies. With the addition of Safeskin, Kimberly-Clark's professional
health care operation is expected to have annual sales of approximately $950
million in 2000.
"We are committed to significantly increasing our presence in health
care," said Wayne R. Sanders, chairman and chief executive officer of
Kimberly-Clark. "The acquisition of Safeskin is a very positive step toward
achieving that goal. Safeskin provides Kimberly-Clark with an entry into the $3
billion latex and synthetic glove market that has become an essential part of
modern health care. Safeskin has built one of the fastest growing, most
technologically innovative and cost-effective businesses in the glove industry.
- more -
<PAGE> 2
- 2 -
"We are pleased to complement our expanding offering of professional
health care products with Safeskin gloves," Mr. Sanders added. "With this
acquisition, we will be able to offer a complete line of head-to-toe protection
products for health care workers."
Combination Leverages Technology, Cost Advantages and Leading Market Positions
As the world's largest producer of nonwoven fabrics, Kimberly-Clark
brings tremendous technology and cost advantages to bear on its health care
products, which include leading market share positions in sterilization wrap,
surgical gowns, face masks and other protective apparel. With the recently
completed acquisition of Ballard Medical Products, the company is also a leading
manufacturer of disposable medical devices in the respiratory care and
gastroenterology markets.
Safeskin, which has the number one market share in the U.S. exam glove
market, is recognized as a leader in product innovation and low-cost production.
Both companies share distribution channels and end users and hope to achieve
significant synergies by combining their complementary product lines.
"We believe that the resources of our two companies will further drive
sales around the world and create cost savings for the combined business," Mr.
Sanders said.
Richard Jaffe, chairman, president and chief executive officer of
Safeskin, said, "This combination provides a partner that we believe can deliver
the best value for our shareholders and an opportunity for the business to grow
and prosper as part of a larger enterprise. Safeskin will benefit from
Kimberly-Clark's broad product offerings, economies of scale and its
international distribution strength."
Terms of the Transaction
Under the agreement, Safeskin shareholders will receive .1956 of a
share of Kimberly-Clark common stock for each share of Safeskin common stock.
Based on the closing price of Kimberly-Clark stock on November 16, 1999, the
transaction has a total value of approximately $850 million, which includes
assumed debt and outstanding options of approximately $155 million. To complete
the acquisition, Kimberly-Clark, which currently has about 544 million shares
outstanding, will issue approximately 10.5 million shares in exchange for
Safeskin's shares.
- more -
<PAGE> 3
- 3 -
The agreement has been unanimously approved by the boards of directors
of both companies. David R. Murray, president of Kimberly-Clark's professional
health care sector, will lead the combined operation. Mr. Jaffe will become a
consultant to the business.
The transaction, which will be tax free to Safeskin shareholders, is
expected to be completed in early 2000 and is subject to certain conditions,
including regulatory clearances and approval by Safeskin shareholders. In
connection with this transaction, Safeskin has granted Kimberly-Clark an option
to purchase up to 14 percent of Safeskin's stock under certain conditions. In
addition, stockholders of Safeskin, beneficially owning approximately 24 percent
of the outstanding shares, including Mr. Jaffe, have agreed to vote their equity
interests in the company in favor of the transaction.
Safeskin Corporation is the world's leading manufacturer of powder-free
exam gloves. The company, based in San Diego, produces gloves at its
manufacturing facilities in Southeast Asia using proprietary formulations and
processes. Safeskin reported net sales of $232 million and net income of $42
million for 1998. The company has been named by Forbes magazine as one of the
"Best Small Companies in America," earning the top ranking on that list in 1996.
With $12.3 billion in sales in 1998, Kimberly-Clark Corporation is a
leading global manufacturer of tissue, personal care, and health care products.
The company's global brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex,
Scott, Kimberly-Clark, Tecnol, Kimwipes and WypAll. Other brands well known
outside the U.S. include Andrex, Scottex, Page, Popee and Kimbies.
Kimberly-Clark also is a major producer of premium business, correspondence and
technical papers. The company has manufacturing operations in 40 countries and
sells its products in more than 150 countries.
Certain matters contained in this news release concerning the business
outlook, anticipated financial and operating results, strategies, contingencies
and transactions of Kimberly-Clark and Safeskin constitute forward-looking
statements and are based upon expectations and beliefs of the management of
Kimberly-Clark and Safeskin concerning future events impacting Kimberly-Clark
and Safeskin. For a description of certain factors that could cause
Kimberly-Clark's future results to differ materially from those expressed in any
such forward-looking statements, see the section of Part I, Item 1 of
Kimberly-Clark's Annual Report on Form 10-K/A for the year ended December 31,
1998 entitled
- more -
<PAGE> 4
- 4 -
"Factors That May Affect Future Results." For a description of certain
factors that could cause Safeskin's future results to differ materially from
those expressed in any such forward-looking statements, see the risk factors
that may be found in Safeskin's most recent Annual Report on Form 10-K for 1998
and Form 10-Q for the third quarter of 1999, and Safeskin's other filings with
the Securities and Exchange Commission.
# # #
<PAGE> 1
EXHIBIT 99.2
EXECUTION COPY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (the "Agreement") dated as of
November 17, 1999, is entered into by the undersigned stockholder (the
"Stockholder") of Safeskin Corporation, a Florida corporation (the "Company"),
for the benefit of Kimberly-Clark Corporation, a Delaware corporation
("Parent").
WHEREAS, Parent, the Company and Brooks Acquisition Corp., a
wholly-owned subsidiary of Parent ("Sub"), are entering into an Agreement and
Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, the Stockholder has sole voting and dispositive power
and/or full voting power as to the aggregate number of shares of Common Stock,
par value $.01 per share, of the Company (the "Company Common Stock") set forth
opposite his name on Schedule A attached hereto; such shares of Company Common
Stock, as such shares may be adjusted by any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, being
referred to herein as the "Subject Shares;" and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in
consideration of its entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to parent as follows:
(a) Authority. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and to the general principles of equity. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time or both) under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets.
<PAGE> 2
(b) The Subject Shares. The Stockholder represents to the
Parent that (i) he beneficially owns and has sole voting and dispositive power
over the number of shares of Company Common Stock set forth opposite his name on
Schedule A hereto, (ii) his beneficial ownership of such shares is free and
clear of all liens, charges and encumbrances, agreements and commitments of
every kind, (iii) as of the date of the Merger he will have no plan or intention
to sell or otherwise transfer any shares of Parent Common Stock to be received
by the Stockholder pursuant to the Merger to Parent (or any person that is or
may become related to Parent within the meaning of Treas. Reg. Section
1.368(e)(3)), and (iv) the Stockholder has not sold or otherwise transferred to
the Company (or any person related to the Company within the meaning of Temp.
Treas. Reg. Section 1.368-1T(e)(2)(ii)), any shares of Company Common Stock, as
part of any overall plan that includes the Merger. The representations and
warranties of the Stockholder set forth in this Agreement shall not survive
termination of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Stockholder that Parent has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding obligation of Parent enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and to general principles of equity.
3. COVENANTS OF THE STOCKHOLDER.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger or the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval with
respect to the Merger or the Merger Agreement is sought, the Stockholder shall
vote (or cause to be voted) the Subject Shares, and any other voting securities
of the Company, whether issued heretofore or hereafter, that such person has the
right to vote, in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote or consent of the Subject Shares is sought, the Stockholder shall vote (or
cause to be voted) the Subject Shares, and any other voting securities of the
Company, whether issued heretofore or hereafter, that such person has the right
to vote, against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, sale of stock, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any of its subsidiaries or any
other Takeover Proposal (as defined in the Merger Agreement); (ii) any amendment
of the Company's Articles of Incorporation or Bylaws or other proposal or
-2-
<PAGE> 3
transaction involving the Company or any of its subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or which is reasonable likely to result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled; (iii) any change in the Company's Board of Directors; or
(iv) any change in the present capitalization of the Company.
(c) Other than in the context of a business combination in
which the Subject Shares are converted or exchanged without the Stockholder's
voluntary action by operation of law, the Stockholder agrees not to sell,
transfer, pledge, assign or otherwise dispose of (collectively "Transfer"), or
enter into any contract, option or other arrangement with respect to the sale,
transfer, pledge, assignment or other disposition of, the Subject Shares or any
other voting securities of the Company, whether issued heretofore or hereafter,
that such person has the right to vote to any person; provided, that the
Stockholder may Transfer Subject Shares by gift to charitable organizations or
by gift to members of the "immediate family" (as defined in Rule 16a- 1(e) of
the Exchange Act) of the Stockholder but only if such charitable organization or
member agrees in writing to be bound by the terms of this Agreement. The
Stockholder agrees and consents to the entry of stop transfer instructions with
the Company against the transfer of any Subject Shares in violation of this
Section 3(c).
(d) The Stockholder agrees not to enter into any voting
arrangement with respect to the Subject Shares (other than this Agreement),
whether by proxy, voting arrangement, voting agreement or otherwise.
(e) The Stockholder shall not, and shall use his best efforts
to cause any investment banker, attorney or other adviser or representative of
the Stockholder not to, (i) directly or indirectly solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal; or (ii) directly
or indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or knowingly take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover Proposal.
4. AFFILIATES LETTER. The Stockholder agrees to execute and
deliver on a timely basis a letter agreement in the form of Exhibit E to the
Merger Agreement, when and if requested by Parent prior to the effectiveness of
the Merger.
5. FURTHER ASSURANCE. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent may request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by the parties without the
prior written consent of the
-3-
<PAGE> 4
other party. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Stockholder, his
personal or legal representatives, executors, administrators, heirs,
distributors, devises and legatees and by the Parent, its successors and
assigns.
7. TERMINATION. This Agreement shall terminate upon the
earliest of (i) the close of business on May 31, 2000; (ii) the Effective Time
(as defined in the Merger Agreement); (iii) the termination of the Merger
Agreement in accordance with its terms; provided, that (x) if the Merger
Agreement is terminated pursuant to Sections 8.1(f) or (g) of the Merger
Agreement or (y) if any Takeover Proposal by any Person (other than Parent or an
Affiliate of Parent), this Agreement shall survive for 90 days following the
termination of the Merger Agreement. The termination of this Agreement or any
provision hereof shall not relive either party hereto from any liability for any
breach of this Agreement or such provision prior to such termination.
8. GENERAL PROVISIONS.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. Any notice, request, instruction or other document
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile.
(i) if to Parent, to:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Facsimile: (972) 281-1212
Attention: Sr. Vice President and General Counsel
with a copy to:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, IL 60603
Facsimile: (312) 853-7036
Attention: Dennis V. Osimitz, Esq.
(ii) if to the Stockholder, to the address listed in
Schedule A attached hereto
-4-
<PAGE> 5
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile: (212) 309-7044
Attention: Howard L. Shecter
or such other persons or addresses as may be designated in writing by the party
to receive such notice as provided above.
(c) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Capitalized terms used herein but not otherwise defined
herein shall have the meanings set forth in the Merger Agreement.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred in herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within the State of Delaware.
9. STOCKHOLDER CAPACITY. The Stockholder signs solely in his
capacity as the record holder and/or beneficial owner of the Subject Shares and
nothing herein shall limit, impose any obligation on, or affect any actions
taken by the Stockholder in his capacity as an officer or director of the
Company.
10. ENFORCEMENT. The parties hereto acknowledge that damages
would be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder shall be specifically
enforceable. It is accordingly agreed that
-5-
<PAGE> 6
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Delaware or in a Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees that such party will not bring any action relating to
this Agreement or any of the transactions contemplated hereby in any court other
than a Federal court sitting in the State of Delaware or a Delaware state court
and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 7
IN WITNESS WHEREOF, Parent has caused this Agreement to be
signed by its respective officers thereunto duly authorized and the Stockholder
has signed this Agreement, all as of the date first written above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Group President -
Globalhealthcare/non wovens
By: /s/ RICHARD JAFFE
Richard Jaffe
-7-
<PAGE> 8
SCHEDULE A
NAME OF STOCKHOLDER NUMBER OF SUBJECT SHARES ADDRESS OF STOCKHOLDER
- ------------------- ------------------------ ----------------------
Richard Jaffe Shares: 2,642,600 8646 Rouette Monte Carlo
Options: 2,601,000 La Jolla, CA 92037
Irving Jaffe Shares: 2,749,928 20290 Fairway Oaks Drive
Options: 44,000 Apartment #284
Boca Raton, FL 33434
Neil K. Braverman Shares: 4,273,958 4156 Brynwood Drive
Options: 970,000 Naples, FL 34119
-8-
<PAGE> 1
EXHIBIT 99.3
EXECUTION COPY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (the "Agreement") dated as of
November 17, 1999, is entered into by the undersigned stockholder (the
"Stockholder") of Safeskin Corporation, a Florida corporation (the "Company"),
for the benefit of Kimberly-Clark Corporation, a Delaware corporation
("Parent").
WHEREAS, Parent, the Company and Brooks Acquisition Corp., a
wholly-owned subsidiary of Parent ("Sub"), are entering into an Agreement and
Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, the Stockholder has sole voting and dispositive power
and/or full voting power as to the aggregate number of shares of Common Stock,
par value $.01 per share, of the Company (the "Company Common Stock") set forth
opposite his name on Schedule A attached hereto; such shares of Company Common
Stock, as such shares may be adjusted by any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, being
referred to herein as the "Subject Shares;" and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in
consideration of its entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to parent as follows:
(a) Authority. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and to the general principles of equity. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time or both) under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets.
<PAGE> 2
(b) The Subject Shares. The Stockholder represents to the
Parent that (i) he beneficially owns and has sole voting and dispositive power
over the number of shares of Company Common Stock set forth opposite his name on
Schedule A hereto, (ii) his beneficial ownership of such shares is free and
clear of all liens, charges and encumbrances, agreements and commitments of
every kind, (iii) as of the date of the Merger he will have no plan or intention
to sell or otherwise transfer any shares of Parent Common Stock to be received
by the Stockholder pursuant to the Merger to Parent (or any person that is or
may become related to Parent within the meaning of Treas. Reg. Section
1.368(e)(3)), and (iv) the Stockholder has not sold or otherwise transferred to
the Company (or any person related to the Company within the meaning of Temp.
Treas. Reg. Section 1.368-1T(e)(2)(ii)), any shares of Company Common Stock, as
part of any overall plan that includes the Merger. The representations and
warranties of the Stockholder set forth in this Agreement shall not survive
termination of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Stockholder that Parent has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding obligation of Parent enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and to general principles of equity.
3. COVENANTS OF THE STOCKHOLDER.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger or the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval with
respect to the Merger or the Merger Agreement is sought, the Stockholder shall
vote (or cause to be voted) the Subject Shares, and any other voting securities
of the Company, whether issued heretofore or hereafter, that such person has the
right to vote, in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote or consent of the Subject Shares is sought, the Stockholder shall vote (or
cause to be voted) the Subject Shares, and any other voting securities of the
Company, whether issued heretofore or hereafter, that such person has the right
to vote, against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, sale of stock, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any of its subsidiaries or any
other Takeover Proposal (as defined in the Merger Agreement); (ii) any amendment
of the Company's Articles of Incorporation or Bylaws or other proposal or
-2-
<PAGE> 3
transaction involving the Company or any of its subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or which is reasonable likely to result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled; (iii) any change in the Company's Board of Directors; or
(iv) any change in the present capitalization of the Company.
(c) Other than in the context of a business combination in
which the Subject Shares are converted or exchanged without the Stockholder's
voluntary action by operation of law, the Stockholder agrees not to sell,
transfer, pledge, assign or otherwise dispose of (collectively "Transfer"), or
enter into any contract, option or other arrangement with respect to the sale,
transfer, pledge, assignment or other disposition of, the Subject Shares or any
other voting securities of the Company, whether issued heretofore or hereafter,
that such person has the right to vote to any person; provided, that the
Stockholder may Transfer Subject Shares by gift to charitable organizations or
by gift to members of the "immediate family" (as defined in Rule 16a- 1(e) of
the Exchange Act) of the Stockholder but only if such charitable organization or
member agrees in writing to be bound by the terms of this Agreement. The
Stockholder agrees and consents to the entry of stop transfer instructions with
the Company against the transfer of any Subject Shares in violation of this
Section 3(c).
(d) The Stockholder agrees not to enter into any voting
arrangement with respect to the Subject Shares (other than this Agreement),
whether by proxy, voting arrangement, voting agreement or otherwise.
(e) The Stockholder shall not, and shall use his best efforts
to cause any investment banker, attorney or other adviser or representative of
the Stockholder not to, (i) directly or indirectly solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal; or (ii) directly
or indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or knowingly take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover Proposal.
4. AFFILIATES LETTER. The Stockholder agrees to execute and
deliver on a timely basis a letter agreement in the form of Exhibit E to the
Merger Agreement, when and if requested by Parent prior to the effectiveness of
the Merger.
5. FURTHER ASSURANCE. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent may request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by the parties without the
prior written consent of the
-3-
<PAGE> 4
other party. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Stockholder, his
personal or legal representatives, executors, administrators, heirs,
distributors, devises and legatees and by the Parent, its successors and
assigns.
7. TERMINATION. This Agreement shall terminate upon the
earliest of (i) the close of business on May 31, 2000; (ii) the Effective Time
(as defined in the Merger Agreement); (iii) the termination of the Merger
Agreement in accordance with its terms; provided, that (x) if the Merger
Agreement is terminated pursuant to Sections 8.1(f) or (g) of the Merger
Agreement or (y) if any Takeover Proposal by any Person (other than Parent or an
Affiliate of Parent), this Agreement shall survive for 90 days following the
termination of the Merger Agreement. The termination of this Agreement or any
provision hereof shall not relive either party hereto from any liability for any
breach of this Agreement or such provision prior to such termination.
8. GENERAL PROVISIONS.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. Any notice, request, instruction or other document
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile.
(i) if to Parent, to:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Facsimile: (972) 281-1212
Attention: Sr. Vice President and General Counsel
with a copy to:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, IL 60603
Facsimile: (312) 853-7036
Attention: Dennis V. Osimitz, Esq.
(ii) if to the Stockholder, to the address listed in
Schedule A attached hereto
-4-
<PAGE> 5
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile: (212) 309-7044
Attention: Howard L. Shecter
or such other persons or addresses as may be designated in writing by the party
to receive such notice as provided above.
(c) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Capitalized terms used herein but not otherwise defined
herein shall have the meanings set forth in the Merger Agreement.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred in herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within the State of Delaware.
9. STOCKHOLDER CAPACITY. The Stockholder signs solely in his
capacity as the record holder and/or beneficial owner of the Subject Shares and
nothing herein shall limit, impose any obligation on, or affect any actions
taken by the Stockholder in his capacity as an officer or director of the
Company.
10. ENFORCEMENT. The parties hereto acknowledge that damages
would be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder shall be specifically
enforceable. It is accordingly agreed that
-5-
<PAGE> 6
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Delaware or in a Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees that such party will not bring any action relating to
this Agreement or any of the transactions contemplated hereby in any court other
than a Federal court sitting in the State of Delaware or a Delaware state court
and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 7
IN WITNESS WHEREOF, Parent has caused this Agreement to be
signed by its respective officers thereunto duly authorized and the Stockholder
has signed this Agreement, all as of the date first written above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Group President -
Globalhealthcare/non wovens
By: /s/ IRVING JAFFE
Irving Jaffe
-7-
<PAGE> 8
SCHEDULE A
NAME OF STOCKHOLDER NUMBER OF SUBJECT SHARES ADDRESS OF STOCKHOLDER
- ------------------- ------------------------ ----------------------
Richard Jaffe Shares: 2,642,600 8646 Rouette Monte Carlo
Options: 2,601,000 La Jolla, CA 92037
Irving Jaffe Shares: 2,749,928 20290 Fairway Oaks Drive
Options: 44,000 Apartment #284
Boca Raton, FL 33434
Neil K. Braverman Shares: 4,273,958 4156 Brynwood Drive
Options: 970,000 Naples, FL 34119
-8-
<PAGE> 1
EXHIBIT 99.4
EXECUTION COPY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT (the "Agreement") dated as of
November 17, 1999, is entered into by the undersigned stockholder (the
"Stockholder") of Safeskin Corporation, a Florida corporation (the "Company"),
for the benefit of Kimberly-Clark Corporation, a Delaware corporation
("Parent").
WHEREAS, Parent, the Company and Brooks Acquisition Corp., a
wholly-owned subsidiary of Parent ("Sub"), are entering into an Agreement and
Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, the Stockholder has sole voting and dispositive power
and/or full voting power as to the aggregate number of shares of Common Stock,
par value $.01 per share, of the Company (the "Company Common Stock") set forth
opposite his name on Schedule A attached hereto; such shares of Company Common
Stock, as such shares may be adjusted by any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, being
referred to herein as the "Subject Shares;" and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in
consideration of its entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to parent as follows:
(a) Authority. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and to the general principles of equity. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time or both) under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets.
<PAGE> 2
(b) The Subject Shares. The Stockholder represents to the
Parent that (i) he beneficially owns and has sole voting and dispositive power
over the number of shares of Company Common Stock set forth opposite his name on
Schedule A hereto, (ii) his beneficial ownership of such shares is free and
clear of all liens, charges and encumbrances, agreements and commitments of
every kind, (iii) as of the date of the Merger he will have no plan or intention
to sell or otherwise transfer any shares of Parent Common Stock to be received
by the Stockholder pursuant to the Merger to Parent (or any person that is or
may become related to Parent within the meaning of Treas. Reg. Section
1.368(e)(3)), and (iv) the Stockholder has not sold or otherwise transferred to
the Company (or any person related to the Company within the meaning of Temp.
Treas. Reg. Section 1.368-1T(e)(2)(ii)), any shares of Company Common Stock, as
part of any overall plan that includes the Merger. The representations and
warranties of the Stockholder set forth in this Agreement shall not survive
termination of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Stockholder that Parent has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding obligation of Parent enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and to general principles of equity.
3. COVENANTS OF THE STOCKHOLDER.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger or the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval with
respect to the Merger or the Merger Agreement is sought, the Stockholder shall
vote (or cause to be voted) the Subject Shares, and any other voting securities
of the Company, whether issued heretofore or hereafter, that such person has the
right to vote, in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote or consent of the Subject Shares is sought, the Stockholder shall vote (or
cause to be voted) the Subject Shares, and any other voting securities of the
Company, whether issued heretofore or hereafter, that such person has the right
to vote, against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, sale of stock, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any of its subsidiaries or any
other Takeover Proposal (as defined in the Merger Agreement); (ii) any amendment
of the Company's Articles of Incorporation or Bylaws or other proposal or
-2-
<PAGE> 3
transaction involving the Company or any of its subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or which is reasonable likely to result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled; (iii) any change in the Company's Board of Directors; or
(iv) any change in the present capitalization of the Company.
(c) Other than in the context of a business combination in
which the Subject Shares are converted or exchanged without the Stockholder's
voluntary action by operation of law, the Stockholder agrees not to sell,
transfer, pledge, assign or otherwise dispose of (collectively "Transfer"), or
enter into any contract, option or other arrangement with respect to the sale,
transfer, pledge, assignment or other disposition of, the Subject Shares or any
other voting securities of the Company, whether issued heretofore or hereafter,
that such person has the right to vote to any person; provided, that the
Stockholder may Transfer Subject Shares by gift to charitable organizations or
by gift to members of the "immediate family" (as defined in Rule 16a- 1(e) of
the Exchange Act) of the Stockholder but only if such charitable organization or
member agrees in writing to be bound by the terms of this Agreement. The
Stockholder agrees and consents to the entry of stop transfer instructions with
the Company against the transfer of any Subject Shares in violation of this
Section 3(c).
(d) The Stockholder agrees not to enter into any voting
arrangement with respect to the Subject Shares (other than this Agreement),
whether by proxy, voting arrangement, voting agreement or otherwise.
(e) The Stockholder shall not, and shall use his best efforts
to cause any investment banker, attorney or other adviser or representative of
the Stockholder not to, (i) directly or indirectly solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal; or (ii) directly
or indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or knowingly take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover Proposal.
4. AFFILIATES LETTER. The Stockholder agrees to execute and
deliver on a timely basis a letter agreement in the form of Exhibit E to the
Merger Agreement, when and if requested by Parent prior to the effectiveness of
the Merger.
5. FURTHER ASSURANCE. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent may request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by the parties without the
prior written consent of the
-3-
<PAGE> 4
other party. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Stockholder, his
personal or legal representatives, executors, administrators, heirs,
distributors, devises and legatees and by the Parent, its successors and
assigns.
7. TERMINATION. This Agreement shall terminate upon the
earliest of (i) the close of business on May 31, 2000; (ii) the Effective Time
(as defined in the Merger Agreement); (iii) the termination of the Merger
Agreement in accordance with its terms; provided, that (x) if the Merger
Agreement is terminated pursuant to Sections 8.1(f) or (g) of the Merger
Agreement or (y) if any Takeover Proposal by any Person (other than Parent or an
Affiliate of Parent), this Agreement shall survive for 90 days following the
termination of the Merger Agreement. The termination of this Agreement or any
provision hereof shall not relive either party hereto from any liability for any
breach of this Agreement or such provision prior to such termination.
8. GENERAL PROVISIONS.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. Any notice, request, instruction or other document
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile.
(i) if to Parent, to:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Facsimile: (972) 281-1212
Attention: Sr. Vice President and General Counsel
with a copy to:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, IL 60603
Facsimile: (312) 853-7036
Attention: Dennis V. Osimitz, Esq.
(ii) if to the Stockholder, to the address listed in
Schedule A attached hereto
-4-
<PAGE> 5
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile: (212) 309-7044
Attention: Howard L. Shecter
or such other persons or addresses as may be designated in writing by the party
to receive such notice as provided above.
(c) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Capitalized terms used herein but not otherwise defined
herein shall have the meanings set forth in the Merger Agreement.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred in herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within the State of Delaware.
9. STOCKHOLDER CAPACITY. The Stockholder signs solely in his
capacity as the record holder and/or beneficial owner of the Subject Shares and
nothing herein shall limit, impose any obligation on, or affect any actions
taken by the Stockholder in his capacity as an officer or director of the
Company.
10. ENFORCEMENT. The parties hereto acknowledge that damages
would be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder shall be specifically
enforceable. It is accordingly agreed that
-5-
<PAGE> 6
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Delaware or in a Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees that such party will not bring any action relating to
this Agreement or any of the transactions contemplated hereby in any court other
than a Federal court sitting in the State of Delaware or a Delaware state court
and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 7
IN WITNESS WHEREOF, Parent has caused this Agreement to be
signed by its respective officers thereunto duly authorized and the Stockholder
has signed this Agreement, all as of the date first written above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
Name: Robert E. Abernathy
Title: Group President -
Globalhealthcare/non wovens
By: /s/ NEIL K. BRAVERMAN
Neil K. Braverman
-7-
<PAGE> 8
SCHEDULE A
NAME OF STOCKHOLDER NUMBER OF SUBJECT SHARES ADDRESS OF STOCKHOLDER
- ------------------- ------------------------ ----------------------
Richard Jaffe Shares: 2,642,600 8646 Rouette Monte Carlo
Options: 2,601,000 La Jolla, CA 92037
Irving Jaffe Shares: 2,749,928 20290 Fairway Oaks Drive
Options: 44,000 Apartment #284
Boca Raton, FL 33434
Neil K. Braverman Shares: 4,273,958 4156 Brynwood Drive
Options: 970,000 Naples, FL 34119
-8-
